Yes that is a temperature sensor. If it is just two prong it might just be the one for the gauge in the dash....does the gauge still work? If not, that is it. If it is still working, then the sensor is for the ignition computer. It should be obvious if you search the parts site for a temperature sensor which one it is, based on the pictures.

__________________
-diesel is not just a fuel, its a way of life-
'15 GLK250 Bluetec 118k - mine - (OC-123,800)
'17 Metris(VITO!) - 37k - wifes (OC-41k)
'09 Sprinter 3500 Winnebago View - 62k (OC - 67k)
'13 ML350 Bluetec - 95k - dad's (OC-98k)
'01 SL500 - 103k(km) - dad's (OC-110,000km)
'16 E400 4matic Sedan - 148k - Brothers (OC-155k)