PNUTMNM,
What you've explained is exactly how I read the Service Bulletin that was sent out a few weeks ago, basically saying once you engage defrost, the compressor stays on until the car or fan is turned off.

While I think this is a bit odd, it's at least documented. This morning at the dealership, we confirmed that two 2003 XEs did indeed work this way. Once you turned off the vehicle, and back on, you once again had control over the compressor.

Unfortunately my vehicle, and another SE on the lot don't work that way. The compressor is a function of the fan only.

For anyone who has a 2003 that is working "properly" but doesn't like the defrost issue, I found a writeup that explains how to disable it. I've already poked around and found the electrical switch but haven't implemented the change yet, since it doesn't do anything on my SE anyway. If Nissan ever gets it working properly, I'll then disable the defrost/auto-compressor switch.

The writeup is at...
http://nissanoffroad.net/frontier/how_to/auto_on/default.asp

Kurt