Remember that the recirculation ensures the heater does not have to take new (cold) air from the outside and heat it up. Recirculating air allows the engine to take warm air, heat it up more, and pump it right back in the car.
This also uses less stress on the engine too.
The problem with condensation is not normal, however, and you should have your local dealer look at it. As it is a 2006, it is most likely under warranty still.
If it is not under warranty, try use the recirculation button and crack a window- cheap and effective solution.