Well .. here's what I found out ...

As I mentioned, the A4 I was looking at was overheating .. reading as high as 200 on the temp sensor. Upon looking closely at the engine and with the help of Moyer's manual, it seems the original owner removed the thermostat, plugged the bypass intake in the thermostat housing and installed a manual gate valve to manually control the bypass mix.

I examined the impeller .. looked ok. The water heater was removed 2 seasons ago, but the heater lines were still in the system and linked to run thru. To help isolate the cooling issue, I removed the WH hoses and replaced it with a short section of clear hose which is used to flush the engine with fresh water after each use (a barb fitting and valve are already installed at the raw water intake). This was then run from the thermostat housing directly into the intake for the manifold.

I ran the engine .. the temp sensor showed 180 and climbing, but when I put my hand on the clear hose .. I could comfortably hold my hand there for a long time (with the bypass closed, thus 100% flow thru the engine and out the thermo housing). I borrowed an IR thermo-sensor .. and the water was never reading more than 125 deg .. while the temp sensor was over 180. When I looked at the temp of the head at the temp sensor .. it read 180deg.

Also, having the clear hose allowed me to see that there wasn't an unusual amount of air bubbles in the line. This was comforting, since one of my theories was a pin hole in the head gasket steaming the coolant. If this was an issue, shouldn't it produce considerable air in the coolant lines.

I tried to remove the temp sensor (looks like the original) with a 6pt 7/8 - 1/2" drive socket .. but I could feel it starting to "round". I will try to remove it with a pipe wrench.

So .. my theory is that a large amount of "crap" has built up around the temp sensor and basically blocked off the flow to it and in effect has made it a "head temp" sensor instead of a water temp sensor. Sound reasonable?

I intend to power and acid flush in the coming days as well as attempt remove and clean the temp sensor.

Angelo