David, this variation has bothered me for years and I hope you can get
to the bottom of this. I have seen both behaviors in several Vanagons
but it never made sense as the wiring diagrams each look pretty much the
same in this area. My 83.5 would blink the led with a low level in the
tank but the gauge would stay put. I had a water pump seal failure on a
long trip once and I would just drive with the led flashing and then
stop to add coolant when the needle rose a little above normal. Nerve
wracking to say the least but this is preferable to the behavior of
yours as you can't tell the nature of the condition causing the warning.
It seems like the possible explanations are a wiring error, a defect in
the warning control unit, or a design difference in some units. Have you
tried removing the level warning control unit to see if that disables
the level warning? What is the part number on your warning unit? What is
inside the thing, do you know?

1982 water cooled Vanagons have the connector hanging from the wiring
near the coolant tank but these tanks have no threaded hole for the
level switch. On these models there is no warning control unit and the
wire to the unused level switch connector is merely wired in parallel to
the gauge temp sender. I would expect this to work like yours if there
was a switch in the tank to connect to. I think that the ones that
behave like yours might cause a lot of the head aches some people have
in bleeding the cooling system after servicing it. Having the gauge
shoot up and led start blinking every time some air gets pushed to the
tank would be a pain.

page 97.38  1982 diesel
page 97.43  1983 diesel
page 97.56  1983,84
page 97.92  1985
page 97.75  1986, early
page 97.92  1986, late
page 97.109 1987
page 97.127 1988,89
page 97.209 1990,91

Mark