Posting this for future searches. Great description in this link: http://matt.zenfolio.com/xk-coolant-...tat---v1-1.pdf

My car's symptoms: Ran at 230 degrees; temp dropped 15 degrees with heater on highest hot setting; temp dropped 15 degrees with idle RPM increased to 4000.
Lower Radiator hose hot to touch; Upper radiator hose just warm.

New Thermostat: I can see it open at 210 degrees, temp drops to 185 fast. (Yes I have a RealGuage installed).

One thing about that one though, he recommends replacing thermostat as precaution after the flush. If your thermostat is faulty do it first - you need it to open and it is a super easy job.

1998 xk8 replace thermostat: Thermostat housing is at the end of the lower radiator hose on engine block side. (posting this because it looks a little different than the photos in the above excellent link. Don't know if that's Normally Aspirated difference (his is super charged) or 1998 difference.

Difficulty: 1 out of 10 (10 is hardest)

Put hood in service position.

Get a 8mm ratchet with extension. short extension for 1 bolt. Long extension for the 2 others.

I used a compressed air ratchet wrench, the 3 8mm bolts holding the thermostat in are nearly 2 inches long. FWIW I used a extra long long nose pliers to grab the bolt when it was loosened. Didn't want to chase it if it fell.

You need to to no more than remove the 3 bolts on a cool engine. Pull the lower radiator hose back (it is still attached to the forward thermostat housing you just loosened). Pry the old thermostat out (note the brass relief valve at top of thermostat). Put the new thermostat in same orientation brass at top.

Tighten bolds to 7ft lbs. Job done.

John