First, do you have good air flow out of defrost vents with fan on HIGH?
Does or did this vehicle have AC?
Are BOTH heater hoses in the engine bay HOT after engine is warmed up?
B2 will have a cable operated Blend Door, fold down glove box all the way, look at the upper left of opening and you will see a cable sheath
Move the COLD-HOT slider on climate control panel and you will see that cable end moving an arm at the top of the "air box"
That arm is attached to the blend door inside the box
The blend door routes air from the fan thru the heater core or around the heater core, so it "blends" warmer and cooler air from the fan
You should be able to hear blend door opening and closing, it makes a "thud" noise when its closed as it seals off the passage, if blend door is broken then you basically have to remove the whole dash to change it, bummer
But you can cut a hole behind the glove box in the air box, then reach in and move the blend door to get full heat back, then put duct tape over the hole you cut
Picture here:
https://i.ytimg.com/vi/bpsul3ynEyA/maxresdefault.jpg
Those are not colored wires, they are vacuum lines for the Vents
And this is a 1995 and up Ford so uses an electric blend door not cable operated, so you don't see a cable
As for the Vent controls, defrost, panel and floor
These use Vacuum "motors" to operate vent doors that route the air thru the various passages
With no vacuum present Defrost gets all the air flow from fan, its the default setting
The vacuum is provided by the engine's intake manifold vacuum
But it is stored in a Vacuum reservoir so the Vents can work when accelerating, when there is no vacuum in engine intake
The vacuum reservoir will be in the engine bay, and on a B2 it may be on the top of heater box, small black canister with 2 vacuum hoses connected
1 hose runs to the engine
The other runs thru the firewall to the Climate control panel to "power" the vacuum "motors"
As said the device highlighted in your picture is the resistor block for the fan, if you only have HIGH speed but nothing else then that resistor block is bad
If fan works at all speeds then resistor block is OK