So got the tstat housing off today and tstat seems fine. Tested it in a pot of water along with a new one that I picked up just in case and both opened at 160 and fully open at around 170 then closed fully when I took them out. So I turned my attention to the housing. The housing is brand new as is mostly everything else. This is what came out after running a abraded wire through the bypass port and through the manifold ports....
It's like sand?? At first I thought maybe the old impeller disintegrated before i got into the housing but that's not possible because before I replaced the water pump with a new pump and impeller, I put a new impeller into the old pump before I ran it. Maybe this is just leftover gunk that was in the out drive, oil cooler and hoses I didn't replace, before the water pump and plumbing up tot he tstat housing? Anyway, all ports are cleaned out and there's nothing that is blocked so hopefully this will do the trick and get her up to normal operating temp.
Bruce,
I found the sender.... It's on the intake manifold right under the tstat housing and was covered up by one of the hoses going to the tstat housing. At least I know where it is now

I was measuring near its vicinity with the IR gun when I was getting the 120-130 readings.