Sounds like a CHT sensor malfunction. Other possibilities such as a thermostat stuck open shouldn't cause the gauge to drop to "cold like when you first start up the car". Does the engine still feel hot after hard acceleration? If the car seems to run well hot and cold and the heater works as it should (same temp output, same time to warm up) the actual engine temp, controlled by the thermostat, should be good and it's a gauge/sensor problem. The sensor resistance will vary with temp so taking some readings cold, warm, and hot should tell you if it is indeed malfunctioning. Others may know just those reading should be. The Coolant Temperature Circuit Malfunction code tells me though that the circuit may be open-code is set if there is infinite (open circuit) resistance which is abnormal under any circumstance, engine hot or cold.
Do you have a digital multimeter to check resistance?

 

Actually I don't have one. Also, last night when driving the *!* light came on and the car tried to die a few times. It's starting to be undriveable since it did this about 4 times in 30 miles. I think I'll take it by a dealer and see what they say. This worries me.

 

Dealer was no help whatsoever. Does anyone know where the CHT sensor is located?

 

Assuming you have a duratec engine, the CHT sensor is mounted vertically between cylinders 2 and 3 - the connector is under a rubber grommet in the middle of the cam cover.

 

ah, I have the zetec, sorry...

 

cht is located at the end of the cylander head. (#4)

 

Thanks!

 

The Zetec uses an ECT sensor, meaning it is measuring the coolant - some are in an external metal tube at the #4 end,
and some are right in the thermostat housing.