This is a repost with more info:
I just had an '83.5 w/c rebuilt.  The engine runs fine but I'm having a 
problem with the cooling system.  The temp guage stays steady at 3/4.  The fan 
comes on a little past that.  If I try to bleed the radiator, with the front 
end lifted, heat on etc., it boils out the back at the same time as it starts 
to bubble out the front valve.  When I'm driving normally, the heat does not 
work but as soon as I go up a hill, the temp guage drops to the led (normal) 
and the heat starts to work.  As soon as I level off, it's back to 3/4.  What 
should I do from here?  

Thanks,
Bryan

83.5 Westy
84 Vanagon
92 Jetta