Thanks yaar. This steel wire just came into my mind when I was writing the thread 
Will check by taking it out.
Its not good that the thermostat knob gets to max and the AC still trips very early.
Do you think changing thermostat will help in this concern, extending AC trip interval? It was a 200 rupees item I think...
Regarding Icing - I have drove for about 6 months with a faulty AC thermostat, I used to get know from the air throw that the icing has started to form inside the chamber
The air throw loses its pressure. Switching off the AC manually for a minute can get it back again fine. So I'm used to it... 
And the car was chilling cool in those days.