My AC does not work on 1,2 or 3. It only works on 4. Does anyone know why this would happen. Thanks for the help!!

It is likely either the switch itself or the blower motor resistor that is causing you problems. Both will exhibit similar symptoms when they have seen the end of their service life. Not an incredibley common occurence on the ML's though. Does the switch seem to move with the same feeling that it always did? Any peculiar noises you're noticing?

My first instinct would be the resistor first, but I could be wrong. Unfortunately, the method I've most often used for testing is to plug a new one in and see if it works. This is unfortunately not an option for most people. There are published resistance values for it that could be checked with a multimeter, although I don't know what they are. If you've got a service manual, it would probably list those. If not, I'm sure it wouldn't be a huge bill of you did have to bring it in. Hard diagnosis always pays off better than hanging parts and hoping.

When I switch from speed 1-3 it does not feel like it catching anything. I glides smoothly when It use to be kind of difficult in a way.

You may be in need of a new AC controller. The internal switch mechanism could have come apart, hence the llack of resitance when attempting to adjust it. It just may not be clicking into the corrct spots. It is difficult to say. Either way, you'll probably end up buying some parts, and I'd hate to point you to the wrong ones. I'm fairly certain it's one or the other, but without actuall looking at it myself, it is hard to say. I'd hit the shop, you'll save a few bucks in the long run. You could even pay for your diag and decline the work (although it can piss off your advisor, if you are a long time customer I wouldn't recommend that approach). Let me know what the findings are.

The dealership gave me this information.
BLOWER FAN CONTROL INOP.
REGULATOR INOP
RESET AND IS WORKING AT THIS TIME
MAY NEED REGULATOR IN FUTURE
I am not really sure what part I need to buy. Where can I get the part/ how much does it usually run

Thanks

At this point you don't need to buy anything. I assume it's working now based on the tech's job story. If it does stop working again, you will be in need of a blower motor regulator, which attaches to the blower motor. These two parts are normally replaced together, as if one has gone bad, it is likely the other is close behind (kind of like overvoltage protection relays and fuel pump relays on 124 cars).