sptt, the engine in your 1988 300TE is designed for an 87 degree C thermostat. Presuming all the cooling system components are functioning properly the 87 degree C thermostat will allow maximum engine efficiency.

I agree with ps2cho. The appearance of the water pump is irrelevant. The condition of the internal components is critical. If the impeller is shot then the water pump is not providing adequate coolant flow through the cooling system to maintain the 87 degree C operating temperature.

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Fred Hoelzle