Sounds like you have an Auxiliary = Heater. The knob you describe sounds like the control for the auxiliary heater. It = can be turned to act as a timer to preheat the vehicle if you push it and turn = it. Mine is about a 15 minute timer. How far you turn it when not pushing it in = sets the temperature (it acts like a thermostat). If the vehicle is not running = it will turn itself off when the time runs out. When the vehicle is running it = will supplement your heat from the engine when it is turned on. This, of = course, is all true if the auxiliary heater is properly working.
 
Marve
'82 diesel = Vanagon