I have an 87', 245 with engine temp control issues; it will operate above normal in routine driving, and almost into the red in traffic. The thermostat & temp control sensor have been replaced & the water pump bearing sounds good. The system was flushed & new hoses installed less than 2,000 miles.

There are also issues with the instrument panel gages going haywire. The differential speed sensor was changed out about 1,000 miles ago & the speedometer began work (but the odometer did not). Then the temp gage began reading hot & the speedometer pegs to 120mph (& stays there) when the car is started.

Does anyone have any thoughts?

 

Make sure the engine is indeed hot, use an infrared temp gauge. Sounds like you have instrument pod issues.

 

A common problem my shop fixed many, many times is a partially clogged radiator that will overheat in low speeds and be better with more air flow. A new radiator, or rodding a copper radiator solves it. (you can't really rod an aluminum radiator)

And

Are you aware of the temp compensation board problems in 1986+ 240's? Where the temp gauge is not accurate due to connection problems on the temp comp board? Here's a way to get true temp reading.

240 Temp Faker

Your speedo is just probably bad. There's really no connection between the two - if fact the gas and fuel gauge have their own voltage regulator on the back of the cluster to make them more accurate.