that the gauge is showing the right Temp again. Ordered a temperature sender ($14 + $6 shipping) and got about 500 ohm at RT. The bad one gave me ~1500 ohm at RT. Upon idling for ~5 minutes, I got 82 C reading.

Anyway, flushed the system with distill water. Replaced a perfectly good T-stat, replaced a bad sender, fill it up with Zerex G-05 coolant and distill water. Total cost of $70 but learnt everthing about the cooling system.