E39 540i odd overheating problem

[006roadster]

Happy Holidays too all,
I was driving around town this afternoon, the car was running for 20 minutes or so nicely warmed up heater running (outside temp was -20). I stopped for about 3 minutes with the engine idling in a parking lot and something weird happened: the heater went from warm to cold and the coolant temperature gauge rose up to red then I had a temp warning light come on. Idling in a bad area I decided to drive the car a short distance where I could park it and let it cool down. As I started driving the temp went back to normal and the heater started blowing warm again. I decided to take the car the nearest BMW dealer (20 miles away freeway driving) the temp was right on normal. I talked to a mechanic at the dealership and he told me that it could be a number of things but he would start with a thermostat replacement. I bought a thermostat at the part counter and proceeded to run my errands again. The problem resurfaced a couple of time after that every time when the car was stopped, first the heater air would go cold then the temp started rising. Ever time I accelerated the temp would go to normal. This did not happen every time I stopped at a light. So my question is: could this be the thermostat? The mechanic told me the 540's came with electric thermostat regulated by a sensor? He also told me that it's unlikely the themostat would get stuck when hot? I've been reading some threads on air in the system, could this be a symptom? If so how to I bleed it? This it the first time I've driven the car in the extreme cold too. Any suggestions are welcome. Thanks.

[006roadster]

There is one specific symptom: the heater air get's cold before this temp goes up. Which indicates to me that it's not an inadequate cooling problem but a circulation problem? If it was the water pump the temp would go up and say up. In my case the temp goes up then shoots down even quicker. If it was not for the fact the cold air was blowing thru the heater I would think it's a sensor problem (unless coolant sensor controls my climate too in some way??)

[Jeron]

I am not as familiar with your engine as the BMW 6cyl's, but I will explain how they work and maybe it will help.

All of this is based on BMW 6cyl's:

1) Temperature rapid fluctuating between hot and normal is a sign of air in the system.
2) Loss of cabin heat is also a sign of air in the system.
3) It is possible during an overheat for the cabin heat to go cold because there is a thermostat which closes in the heater valve to prevent the cabin heater core from getting too hot.

Because your temp is rapidly dropping I dont think you are actually overheating. I would top off the coolant and bleed air from the system.

[006roadster]

that worked thanks