Well I think I am on my own on this one. I am going to try a new t-stat, maybe a water pump. Today on the way home from work where I am on the highway in just 3 miles the heat was fine. I put it on defrost then eventually dialed the temp to the same. Heat came on quick as it normally does and held for many miles. I even dropped the temp way down, turned the HVAC off for a while and the heat came back both times just fine.

The only odd thing is still the engine temp. It climbed up above 80, where it should be, but then dropped back under 80 and stayed there. Near home on city streets near a stop the exhaust smelled a little rich, like the engine was just fired up on a cold day.

I tend to think the temp gauge it correct. Fuel economy is suffering at about 16mpg where I normally am always over 18. Something with the cooling is up, I just do not know what.

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1991 560 SEL / 185k miles
1992 750il / 17k miles - project car