Sounds like you have a temperature sensor that has drifted in value.
Let the car sit until the engine is at ambient temperature. Use an ohmmeter to measure the resistance of the sensor, and compare it to the reading that you are supposed to get for the given ambient temperature.
There is a chart that plots the various values for the NTC (negative temperature coefficient) sensor.
I posted one here for my W126, I am not sure of this but I would not be surprised if the values are the same for your sensor, but you will want to verify that.
Here's the thread where I posted that chart, again make sure it applies to your car.
http://www.peachparts.com/shopforum/showthread.php?t=239276
Good luck.