Well lets start with coolant system. There seems to be a major problem here. Temperature gauge jumps all over the place, from reading dead cold to almost overheating point.
I am also having problems with the heating system in this car. This vehicle seems to have a mind of its own. Going from freezing cold, after running for 20 minutes. Then suddenly the temperature gauge will rise sharply to a point of almost going off the scale. After dropping to normal, there may finally be a little heat. There seems to be some kind of air-lock problem with the system that I can't figure out.
Now let me move on to something else that has been bothering me. The electrical system is very unstable is this car. The mirror switch does not work properly moving in the "out" or "down" positions on either side of the vehicle. The fog lamps switch flickers when you try to turn them on, but will not come on, and when it does only one fog lamp lights up.
The power seat on the drivers side of the car does not move forward, but will move in any other direction.
Interior light does not come on when the driver's side door is opened from the inside, but does from the passengers side. Passenger side door lock also does not work when trying to lock the car from that side.
Finally the radio seems to have an awful problem with static through it.
One good thing I must say about this car is that it handles well under heavy torque, and it also rides smoothly with its independent suspension.
Good Lord, man! The car's got over 240 thousand kilometers on the ticker! I'm no Ford fan, but you might consider cutting them a break in this case...
The problem with the temp guage is probably due to a blown head gasket. When the pressure gets too high it forces coolant through the head gasket. There is no coolant to use to measure the temp and the guage says it's cold. It then jumps because pressure dropped and coolant flow began again. The engine is overheating and will continue to go downhill until it has to be rebuilt.
I also had an issue with the temp gauge going crazy... one minute all the way cold then flying to overheating. When I took it to the garage they found out I had a blown head gasket.
My '95 Thunderbird LX had the exact same problem, and it turned out to be a blown head gasket. It turns out Ford had issued a recall for it and paid for the repair (including the tune up I had done along with the gasket repair). Ford said that it was a factory problem in '94-95 Mustangs and T-birds.