Saab - 9.3 :: 2005 - No Heat / Fan Blows But Cold Air

My daughter has complained about periods of no heat- fan blows but cold air. Next time the heater works fine. She is keeping coolant level up but does need to add a bit (pint or so) say every other month. Last week during the Chicago snow storm she called and told me the heater (which had been working) blew a bunch of "smoke" into the car and onto the windshield and windows which then froze solid. I assume the smoke meant steam and she did say it had a sweet smell when I asked her.

Car was towed to a SAAB dealer who ran the car for a couple hours and found no issue and then drove the car for a period with no issue. I had my local mechanic also check it in the past for no heat and it also worked fine then. Only thing I can think of is that there might be a small/intermittent leak in the head gasket with an exhaust bubble forced into the cooling system? That does not explain the steam in the passenger compartment though. Could it?