Let me give you some food for thought altough I am no guru.
How high does the temp go? above 120?
Does it cool down after getting to speeds greater than 35 mph?
Can you try running it without the thermostat, then you can definately rule that.
How does the auxilary fan know to kick on? If it is run off the the same temperature element as the water temp guage then you may have a bad / uncalibrated temp gauge. But if they are different, then you can probably rule that out as you previously determined.
How about your fan shroud? Is it cracked or missing? That would be a problem.
Can you put a temperature element inside the radiator while it is running? Running it would external cold water should keep it at 80C so I would guess you either have a clogged radiator or uncalibrated / bad temp gauge. You said that you "flushed" the radiator. Could something have lodged inside the radiator and reduced flow?
'89 420 SEL
'90 300 SEL
'68 Olds 88 Convertible
'84 300 SD (sold it)