Keep in mind the purpose of the thermostat is the set the minimum operating temperature. The thermostat has absolute control over that by preventing circulation until it's preset temperature is reached. Once open, it's up to the efficiency of the remaining components - radiator, water pump, fan - to prevent the temperature from rising above that level. I always chuckle when I read that someone is switching to a cooler thermostat because the engine is running hot when the two issues are not related.

The only way for an engine with a properly functioning 160 degree t-stat to continuously run at 140 degrees, would be for there to be a route for the coolant to be bypassing the thermostat and traveling to the radiator. Are you sure the thermostat is fitting tightly in the intake manifold recessed groove and there's not excess corrosion in this area that could allow a bypass? Are you using the correct "water neck" that fits properly and keeps the thermostat clamped tightly against the intake manifold? Are your heater hoses connected to the standard locations at the rear of the right head and lower water pump housing?

Timing, vacuum advance and thermostat are correct. I wouldn't run distilled water, I'd run filtered tap water, and 50 percent green anti freeze. Reason: altered waters are all ineral starved, and will begin to eat any mineral they encounter, such as gasket materials, cast iron, aluminum.

To confirm, I suggest obtaining, or borrowing a hand held laser type temperature reader, and take a look at block, head and radiator temps. It sounds like either the temp gauge, or sender, or both, are out of whack.

The recessed groove in the manifold is in good shape and clear of all debris. I replaced the thermostat housing at the same time I put in the replacement thermostat using correct OEM style bolts to hold the housing down. Checked bolt protrusion thru the housing against the depth of the threaded holes in the manifold. Bolts were torqued to 25 ft/lbs then re-torqued after running the engine. Heater hoses connected to pressed in head fitting and water pump housing.

When I brought the car home there was no thermostat and the sending unit was not hooked up. Looked like it had been disconnected for some time.

The radiator appears to be original. Not a closed system. Water level is staying at the cold fill marks when cold. No water puking out that I can see.

When testing to see if the rally temp gauge works it went all the way up to 250. Don't know about the accuracy yet, especially with original wires, connections and gauge..

I believe it is just coincidence that the radiator cap thermometer and rally temp gauge are both reading the same. Ordered an infrared thermometer today to find out what's really going on.

Using a candy thermometer wrap the probe end to the upper radiator hose with aluminum foil and duct tape (foil because you don't want that tape glue melting on your hose). On cold start and watch the gauge to see if the needle jumps when the thermostat opens and see just how hot it's really getting, sounds like the thermo stuck open or opens too fast. If you remove it, put it in a pan of water on the stove with the candy thermo, heat then watch when it actually opens. It's odd that the thermo cap would read same as the gauge as the thermo cap gets the water cooled by the radiator and the gauge gets the water heated by the engine (assuming your sending unit is on the intake coolant crossover). At least one or both of your temperature sensing devices is defective, and possibly the thermostat as well.

Update:
Finally got a chance to go out for a cruise today. Avg. air temp 65 degrees. Went almost 50 miles, most on the bypass. Got home, let her idle for 3 minutes and took readings with the infrared thermometer at several locations. Avg reading was 180 degrees when the rally gauge only read around 140. Next plan is to run new wiring to the gauge.

If this does ultimately trace back to the sending unit, I highly recommend the Lectric Limited unit for accurate resistance and calibration:

https://www.lectriclimited.com/tempe...ng-unit-115857

I have the Lectric Limited sending unit in my 72 Formula with 455. Before the switch to this sending unit, the stock sending unit had the gauge reading 210. After the switch to the Lectric Limited unit the gauge reads 140-160 depending on the outside temps and how long I'm idling. Car is equipped with Griffin radiator and Milodon aluminum water pump.

Your system is working perfectly. Just send it.

If your wiring has enough resistance to alter your gauge reading then there is a pretty serious problem. I would be more inclined to make sure you have the correct sending unit for the car. The sender is a thermistor that simply changes it's resistance with temperature. The resistance range of the sender needs to be a match to the gauge that it is driving. If the sender is correct and working properly, I would look at the gauge itself. Not positive, but I assume there is a shunt resistor on the back of the gauge terminal posts just like the fuel gauge has. Most of us have been around long enough to know how the fuel gauge will read way off if the shunt resistor goes bad. Back in the day, all the auto parts stores carried replacement shunt resistors in the card mounted HELP! section.

If you don't mind spending some money, you could send the gauge cluster and sender to Pete Serio and he will calibrate everything and rebuild the gauges as needed. Pete likes to change the way the rally temp gauge works so that there is more degrees of freedom between normal and overheat, since the gauge as originally designed only provides a relatively small area between say 200-250.

However, that requires you to remove the dash to get the rally gauges out.

I wouldn't tend to think that the wiring is the issue since you are getting a solid reliable reading. That's not where I would spend my effort at this point, FWIW.

Thanks for everyone's help and suggestions. I am trying to keep the car as original as possible.

I've been wondering about the sending unit. It is a single pole unit. The pictures of the original sending unit show a smaller diameter probe that goes into the manifold than the "correct" replacement parts I'm getting. I've sent back two to different vendors so far because the unit didn't match the picture but can't seem to find one that looks like the "right one" I see in the pictures for a '68.

My rally gauge goes from 100 to 250 with a hash mark at 1/4, 1/2 and 3/4 of the range. When I ground out the plug for the sending unit the gauge went all the way to 250. So that's telling me at least the gauge works.

I wont drive any of my vehicles till they reach at least 130.

Pete was able to recalibrate my gauges. I sent him my gauges and he sent me sending units and did something with a resistor in either my temp or oil gauge. Worked great.

http://precisionpontiac.net/

Good to hear got it figured out.
Have to put a copy in my files in case originals go bad in the 67 FB.
Thanks

Talked to Pete yesterday. We got everything figured out a and a plan to redo my gauges.