The coolant temp sensor is located at the front of the valve cover just to right hand side (as you are standing in front of the car looking at the engine). It is a black plug like thing where when you pull if off it has 4 or 5 pin holes inside of it. I think you can test it with an ohmmeter but I just replaced the part to see if that would help - it did. Before replacing the part the car did idle when warm at about 1000 rpm, when it used to idle at about 750rpm. I will have to take a look at what it is doing now and post it.

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1996 E320
2000 C230 Kompressor
1988 190e 2.3 - 225K miles, owned for 7 years. I cannot say enough good things about this car. Very well built, even at 225 it ran like new.