I can't figure out how to setup the control wires to the heater control valves. There's no position I can find where the wire can open and close the valves. These are the cables that were originally in the car and would be surprised if they stretched beyond functionality.

Does someone have an image that shows the setup? My search skills did not yield a detailed enough photo.

Is the part in the red circle suppose to rotate freely or be rigid?

Is it correct for the control arm to face toward the ground?

Click to view attachment

The flap is supposed to be spring loaded so it should take a bit of force to move that lever. The cable is secured to the lever with a barrel nut.

Make sure your the flap inside hasn't rusted, preventing it from moving.

My lever does spring back from the internal valve spring and is connected to the part circled in red with a barrel nut.

Is the part circled in red suppose to be fixed or free to rotate?

Should the control arm be facing the ground or up toward the engine bay?

control should be facing up and yes it has some movement to it as well. As SirAndy notes you need a barrel nut to secure to the wire.

Yes, it's supposed to rotate so the cable pulls uniformly as the lever moves and the geometry changes.

Just be sure it's not a bus valve, on those the arm is about 180 degrees off and the clamp is the other way around as well. But they can be made to work on a 914.

The valve in the picture is the correct 914 valve IIRC.