I am having EXACTLY the same issue you describe. Only difference for me is the knob goes all the way to the end of the red/hot side, but when I turn it to blue/cold it stops at about one o'clock. However, when it IS turned all the way to red/hot, the heat is only barely on - as if the dial was at about...well, one o'clock.
Like yourself, at first I removed those two screws behind the heating/AC knobs, then realized I didn't need them off, so I put them back on and proceeded with the rest of the install.
Everything went fine with the install, although I did find it very, VERY difficult to get the head unit out. I wired everything up, put it all back together. I was at first very pleased with myself, but now I'm very bummed about the heat, and I'm REALLY not looking forward to pulling the wretched thing apart again.
Wondering if you got this resolved, or if anyone has any ideas? My "guess" is that there is some kind of MECHANICAL cable setup behind that temperature control dial that is part of it, and it has got twisted or jammed or otherwise bolloxed up.