I just wanted to post that this was FINALLY resolved. It was going from bad, to worse to intolerable. First time, dealer could not find anything (cough, cough) but when we took it in a month ago for something else, I BEGGED them to resolve the fume problem. Begged lets say about half a dozen times.
Turns out it was a faulty catalytic convertor and it was replaced under warranty. Now, NO MORE FUMES!!!! We can leave the air on all the time.
What a disappointment but thank god it was covered. So for anyone else with fume/exhaust issues, have them start there.