Coolant Temp Sensor
 

It's under the third intake runner, screwed in the head with a plug on it naturally... It's hard to get to it with the intake manifold on but not impossible. Unplugging it the hardest, then usually with a long extension there is a straight shot onto it, forget the size, (19mm?)... Coolant loss is minor.

you test it by measuring the resistance when its hot, and when its cold. problems are as likely to be the connector or the wiring harness as the actual sensor.

It absolutely can be caused by this sensor! This is the first thing I'd look at in case of hard cold starting, well, after battery...

this guy changed out the CTS without removing the intake manifold. caution for language but like his style :cool:

I just replaced mine in my 89 740 but I was also changing the PCV box and cleaning the throttle body. If you have the TB off it's pretty easy. I used a long 3/8" extension and a 7/8" deep socket. Was a pretty easy job and when I did it on a cold engine I didn't get much water come out. If you keep the cap on and no pressure on the system coolant just dribbles out.

should be, yes.