96 Jetta, Fan selector knob failure/overheating

So I’ve owned my Jetta for about 4 years, and I never really got around to finding out a solution or even explanation for this problem. The knob that you use to select a fan speed overheats really bad everytime I use the heater. Enough to melt the actual knob! Further, I dont get any fan functionality on speed 3, and speed 2 only works if wiggle the knob. Speed 4 and 1 seem to work fine though. The lack of speeds isnt the worry, I’m concerned with the overheating as it gets really bad. Thanks for any advice!

An electrical switch gets hot when the contacts get worn/dirty and make a poor connecction. That’s what you are describing. The only fix is to replace the switch.

The problem more than likely is that the blower motor is dragging due to wear or something caught in the blower wheel housing. (insulation, dead mouse, etc.)

A dragging blower pulls more electrical current (meaning more heat) and this in turn can take out the blower resistor and the fan speed switch.
An ammeter can be used to determine the blower current draw and this should be repaired as it is a legitimate fire hazard.