Not sure where (I haven't figured where everything is on mine yet!) but the 164 has its rear window demister fuse in the boot, where the battery resides.
My late 164 TSpark had just this happen -- although I never noticed any smell, but just didn't get any demisting. Upon looking at the fuse, it had melted, and the fuse holder had partly melted as well (chances are, the corresponding 156 fuse must be in the cabin, for a strong burning smell to be noticed).
Clean the fuse blades; if there's corrosion on them, it increases the resistance and the blades start to heat up... that could be the smell you report.
If the fuse itself looks relatively clean, and shows no sign of heat damage, it would suggest the problem is elsewhere. You say only part of the rear window is clearing? Have you damaged the heat strips by vigorous cleaning recently?
If you can play a guitar and harmonica at the same time, like Bob Dylan or Neil Young, you're a genius. But make that extra bit of effort and strap some cymbals to your knees, suddenly people want to get the hell away from you.
- Rich Hall
Gone but not forgotten - 164 2.0, 164 Super 3.0 V6, 156 1.6 T.Spark, 156 2.5 V6...