This is a guess but I am assuming the 2.0 engine is similar in design to the 2.3.
Standing in front of your car facing the engine look on the right side of the engine just behind the thermostat housing there should be 2 sensors screwed in there, maybe more. One is the sensor for the gauge and the other is the coolant temp sensor.
88 230E (W124)
98 e420 sport replicas