Look up the heater controls in the FSM. One of the maintenance items is periodic lubrication of the cables and pivot points for the diversion valve. Despite being able to move the lever, you may have a broken solid-core cable. Pull the radio console and look behind the right hand side, careful not to break your radio faceplate.

1987 Raider - Roxy
1988 Mighty Max 2.6L Turbo - Pearl
1997 Mountaineer V8 - Freddy
2000 Excursion V10 - Freya