Rob, does the valve open when the engine is running and the heat is on? The VSV is trouble-prone at this age. Run a vacuum line to by-pass the VSV straight to the valve. I did that, and now the valve opens. The VSV will open the valve anytime the temp setting is above 65 deg. Here's a site with pics:
http://www.ddmcse.com/turbo/heatervs.htm
If the valve opens, then the problem is most likely with the blend doors under the dash that control the temperature. For directions to inspect and repair, check the TSRM:
http://www.turboninjas.com/mk3supra/