I also have a new LS460 AWD and it has the same problem. Mildew smell on start up in the morning. It started at about 3K miles. The dealer gave me the same speel - no real fix (yet) - just take it out of recirculate mode. It reduces the smell but its not really a fix. And like you said, you have to do it everytime you start the car. Pretty poor performance for an $80K luxury car. I had a 04 LS430 and never had this type of problem. Very disappointing.