Well it took almost two months, but the A/C in my 2003 Xterra finally works correctly.

To get the whole story, there are two other threads..
http://www.xterraownersclub.com/cgi-local/ultimatebb.cgi?ubb=get_topic;f=38;t=001482

http://www.xterraownersclub.com/cgi-local/ultimatebb.cgi?ubb=get_topic;f=38;t=001500

After going all the way up to the regional parts and service manager, my local dealership (the first one I went to) agreed to take another look at the issue. With the regional rep on site, they had a completely different attitude and completely reversed their stance that everything was normal.

The result, according to the service rep, was that the A/C head unit circuit board does indeed appear to have some manufacturing defect that was causing the compressor to run anytime the fan was on. This does not appear to be an isolated incident since I've personally tested at least one other 2003 Xterra with this problem, but 8 without. This is almost exactly what I detailed to be the potential problem in a full page letter to the service department on my 3rd visit.

Ironically, the second dealership I went to (the place where I purchased the vehicle) stands by their story that the operation was correct, contrary to the regional rep. Nissan Consumer affairs has backed off from saying it was correct, but hasn't agreed there was a problem. It seems to me that someone is still trying to brush this under a rug.

In total it took me 10 visits to two different dealerships; over 2 dozen calls to Nissan Consumer affairs and talking to 4 different people, including a consumer affairs supervisor; and tons of attitude and incompetence from numerous Nissan employees, including one head mechanic who told me the A/C button would likely be removed next year. EVERYONE tried to convince me that what my vehicle was doing was correct, even thought they couldn't explain why other 2003s didn't work this way.

The only time I wasn't told that it was working correctly was when the regional service rep himself met with me and went over the problem and tested 2 other 2003s.

For such a simple fix (replacing the A/C head unit ~$150) Nissan has given itself a black eye in my opinion and wasted a tremendous amount of my time.

Congratulations!

Persistance does pay off!