You didn't mention year of vehicle, so not knowing if your system is vacuum activated (is there such a thing with the Z's?) or not.
The 240 / 260 system is cable actuated, and when you tell me that you're getting heat out the bottom (i.e. feet) when you've switched it to defrost, tells me that your cable is no longer actuating the flapper valve that redirects the air to the defrost hoses.
Since I haven't turned my system on in a few days, I might be forgetting, but if I recall properly in the full Defrost setting, it ONLY sends air up to the window defrost tubes. Therefore NOT getting air out the side vents would be normal, but getting ANY air out the bottom is an indication of something not being plugged in right.
Check the cables at the Heater Box, and also check them at the Heater Control assembly. Sounds like either of two things happened.
First the cable housing clamp could have come loose or undone and is allowing the cable sheath to move without actuating the actual cable and hence the flap. This could be at either end.
Fix for this is to clamp the cable down after checking that the cable is in fact able to move inside the cable housing. If you just clamp it down without checking the cable movement, you might be resetting the condition that caused it to get unclamped in the first place.
Second, the cable came loose from it's connection point at either end or has broken.
Fix here is to re-connect or replace cable. If reconnecting make sure you clamp cable housing such that there isn't additional throw past the point where the flap has moved, as this might be the reason why the cable came loose in the first place. Conversely, don't adjust it so tight that it taKes a violent throw on the lever to get it to actuate.
