Sounds like you have a Meyle thermostat or the wrong one with the incorrect lower block off disc. Another possibility is the radiator is not quite up to the task and the thermostat is running full open and the heater is actually helping. You have to confirm the accuracy of the gauge. Bad wiring and connections add up to make them read on the low side. The 2WD relies on a ground wire for temp gauge sensor. Also make sure you have the correct one and that it isn’t swapped with the temp 2 sensor for the ECU. ECU is blue and gauge is black. 

Dennis

-----Original Message-----
From: Vanagon Mailing List [mailto:vanagon@gerry.vanagon.com] On Behalf Of Steve Williams
Sent: Monday, September 7, 2015 3:02 PM
To: vanagon@GERRY.VANAGON.COM
Subject: Re: Where is temperature sensor & why does needle drop when heater is on?

Hi,

The problem is that the temperature drop doesn't happen "briefly"... the temperature guage stays reading low until I turn off the heater again.

If the thermostat starts opening @ 85C (approx) and is fully open @ 105C, I'd assume that the 105 is where the "normal" spot on the temperature guage.  Add the extra cooling of the front heater core, the temperature drops and the thermostat should start to close & reduce the amount of water flowing to the front radiator, thus increasing the temperature of the water circulating in the engine & keeping the temperature guage at the "normal" level.

I'm leaning towards the list wisdom about a malfunctioning thermostat.

Thanks for the feedback!

Cheers,
Steve W.

On 07/09/2015 10:16 AM, Dan N wrote:
> I think it's normal behavior. When you open the front heater, cold 
> coolant in the heater core flows to the radiator, warm coolant from 
> the radiator flows to the heater core - an exchange - and you see  
> small dip on the coolant gauge. This will happen briefly until the 
> warm coolant in the heater core reach the same temp. as the coolant in 
> the radiator.