Mike D and others. I believe I fixed my running hot problem. I replaced the thermostat 2 day ago and it has run hot every time it went from cold to hot. So I decided to put the old thermostat back in. This is what I found and it is going to be hard to explain but I will give it a try. On the 84 and 85 and probably others but not the generation 2 420 & 560 there is a small hose hooked to the top of the thermostat housing that goes to the radiator and reservoir. I believe it has 2 functions. One is to bleed air out of the thermostat housing and to provide water flow to the top of the thermostat and the temp sensor. The connection that the hose hooks to at the thermostat housing has a check valve in it so it can't pull air back in when the engine cools off. That fitting was plugged up when I checked it. I pulled the housing off a spare 500 engine I have. That is when I found it had a check valve in it. I believe it being plug up prevented any water from flowing through the housing so the temp sensor and thermostat didn't operate as they should. When the housing finally got hot enough for the thermostat to open, it and the sensor got very hot water very quickly causing the temp to rise quickly and then fall back quickly. Once the thermostat was open, even a little, every thing worked fine. The generation 2 engines are different. MB redesigned the thermostat system to a more conventional system so they wouldn't have this problem. I just drove the car again, starting from an engine temp of about 70 deg F. The temp went up to 200 deg F and settled back down to between 188 to 190. I think that is about normal operation.
I don't like to do several things at one time to fix a problem but in this case, it made more sense to do them all at once. This is what I did. I replaced the housing because of the blocked port. I put the old thermostat back in because it didn't fail nearly as often. I replaced the temp sensor because I dropped the old housing when I tried to get the sensor out and broke it. All of the (new) parts were used. We'll see how it does tomorrow morning.

Sorry for the long post but I hope it will help someone else.

Paul

__________________
84 500 SEL (307,xxx miles)