Hmmm....when you mentioned that turning on the heat lowered the temperature, it makes me think that there is a possibility of two things causing no flow through the radiator.
1)Thermostat is not opening
2)Thermostat is installed backwards. (Believe me, you aren't the first that has happened to. Don't ask me how I know that.
)
I will attach a couple of pages from the FSM if that doesn't help iron things out.