If the heater no longer works; this is a sure sign that there is a cooling system problem and not just a faulty gauge. It is important to confirm that the system is not losing coolant; by removing the radiator cap when the motor is cool, and making sure the radiator is completely full. When there is a head gasket or other internal coolant leak; the siphon action between the radiator and the overflow tank will be interrupted. Under that condition, the radiator level will drop; while the overflow tank remains full. If the radiator level is very low; you should have the cooling system pressure tested to check for a blown head gasket or other engine damage, before trying to replace the thermostat.
The cooling system should be drained when the engine is cold, before removing the thermostat. There should be a drain valve on the bottom edge of the radiator. Turn the heater temperature control to high, and remove the radiator cap to facilitate draining of the coolant after the drain valve is opened. Place a large pan under the radator to catch the draining coolant. You can expect between 6 and 10 quarts of liquid to drain out; so it may become necessary to shut the drain valve and empty the catch pan during the process. Many cities will allow used radiator coolant to be disposed of in toilets; as sewage treatment plants are usually able to handle this substance. But you can call them to confirm this.
It is a simple task to replace the thermostat. It is usually located inside the elbow on the engine which connects to the top radiator hose. The thermostat is directional; the end with the spring should go towards the engine. The elbow is usually fastened with two or three bolts. Just remove the radiator hose from the elbow and remove the fastening bolts. Once all the fastener bolts are removed, it may require some pressure, careful prying or tapping with a wooden block or rubber mallet to break the sealing adhesive loose. Sometimes the end of the elbow where the hose previously attached will serve as a good leverage point, where a pipe or screwdriver handle can be inserted to apply prying leverage to break the elbow loose. But the elbow is made of aluminum, which is soft and brittle; so try not to hit it hard, or gouge it with a sharp object.
The joint between the elbow and the engine is sealed with a gasket; and also possibly with an O ring. My catalog shows three different gaskets, and an O ring; but it is unclear. There may be an adapter sandwiched between the elbow and the engine, which might have separate gaskets on its faces. If the elbow comes off and leaves the adapter on the motor; as long as the thermostat comes out with the elbow and the adapter is in good condition, it is not necessary to remove the adapter. But any exposed old paper gaskets must be thoroughly cleaned off with a blade scraper, until no visible fragments remain; and then replaced with a new gasket. It is critically important that all mating surfaces be made surgically clean. Even a small piece of old gasket stuck to a surface can create a leak. After cleaning, I would apply a thin, even coat of Permatex Ultra Gray RTV gasket sealer to the mating surfaces of metal parts. Then place the gasket in position and carefully and evenly tighten the mounting bolts; going back and forth between sides, until the flange is completely seated. Bolts threaded into aluminum can be stripped or broken if too much torque is applied. But it is equally important to tighten the bolts enough to securely seal the joint, and to prevent them from vibrating loose. Once the thermostat and housing are reinstalled; attach the radiator hose and tighten the clamps. If the hose is worn or cracked; replace it with a new hose. Sometimes replacing the original wire type hose clamps with worm gear strap clamps is also advisable.
Close the radiator drain valve, in preparation to refilling the system.There is probably an air bleed nipple in or near the thermostat elbow and adapter. This nipple should be opened before refilling the system with coolant; in order to bleed off trapped air pockets and enable the system to be completely filled. I suggest buying two gallons of undiluted coolant and two gallons of distilled water. Pour a half gallon of pure coolant into the radiator filler neck, and follow with a half gallon of distilled water. Then mix the remaining opened half gallon of coolant in one container with the remaining opened half gallon of distilled water. Add this mixture to the radiator. If you use it all; open the other two bottles, mix them in equal quanties in one container, and continue adding that mixture to the radiator, until coolant begins flowing in an unbroken stream out of the air bleed nipple. Shut the nipple at that point, and fill the radiator until it is completely full. Install the radiator cap, and empty the old coolant from the plastic reservoir tank. Refill the reservoir to the proper level with a 50-50 mixture of coolant and distilled water.
Start the motor and check for leaks. Leave the heater set to hot for at least the first few miles of driving. The temperature gauge and heater should then work normally. I recommend rechecking the coolant level in the radiator when the motor cools down after the first time it is driven. Top up the radiator and the reservoir, if necessary. If the system requires the addition of more coolant, I would recheck it again after the next time the motor is run. Continue rechecking the radiator level until it stops dropping (or until the source of the loss is discovered).