CelicaChez, I am in Bristol, and its a really damp part of the world... Do you use your air con when youre driving? Mine needs a regas and at the moment I have to pop the window down for a minute or two every so often to clear the car.
I think its been said already, but use the air con, fresh air in and heat and it should go away. I have had a few Jap cars and they do tend to steam up, probably because they are well built and dont leak, and retain all the moisture youre breathing out, rather than water coming in...
If you turn off the recirc then the default is to drag in outside air.
To test this, get up close behind a bus and turn the switch off, if youre choking on diesel fumes, its working fine!