The following write-up is an article S. Lucas Valdes (President & Resident Mechanical Engineer of GoWesty) wrote to provide some info on how the gauge works, and to offer some troubleshooting tips for a quick fix.
The coolant temperature gauge and LED on all 1983-1991 Vanagons are comprised of four main components:
1) The gauge and LED itself in the dashboard
2) The coolant temperature sensor on the thermostat housing on the engine
a. On 83-85 models, it is very small, with only one yellow/red wire going to it
b. On 86-91 models, it is the black one with two wires going to it
3) The coolant level sensor in the coolant bottle in engine compartment
4) The coolant level control unit under the dashboard
When the ignition key is turned to the run position, the LED in the gauge is supposed to flash for a few seconds, then go off. Once the engine is started, the LED is supposed to stay off. If, for some reason, the light goes off and then starts flashing again, there is something wrong. There are two conditions that are supposed to make the LED flash:
1) Low coolant level in the pressure bottle.
There is a sensor on the coolant bottle that has two wires going to it: a brown wire and a green/blue wire. The brown wire goes to the chassis ground; the blue/green wire goes to the coolant level warning control unit. When there is sufficient coolant in the pressure bottle, the sensor on the bottle completes the path between the two wires. If there is no path present between blue/green wire and ground, and therefore none coming from the pressure tank level switch; this will cause the light to blink. When troubleshooting, check the two wires going to the coolant level switch in the pressure tank. Remove the plug on the level sensor, and make sure that brown wire is providing a ground path to the sensor. If so, put a paper clip across the pins of the plug you removed while it is still unplugged and see if the light goes out. (NOTE: In order to reset the system, it is necessary to cycle the ignition key to the off position.) If the light does go out, and your coolant level is OK, your problem is the coolant level sensor—which is rare since it is such a simple device. it could be just a dirty connection between the electrical plug and sensor. We have had to replace the metal electrical connectors inside the plug quite commonly because of corrosion. After all, there is often moisture present in this area. If these circuits are definitely good, then check the coolant temperature sensor circuit all the way up to the gauge. I could be a bad connection at the instrument cluster 14-pin plug. It is common for brake fluid to get spilled in this area causing harm to the connections there.
2) Engine temperature exceeding about 15/16ths on the gauge.
The coolant temperature sensor is a variable resistor. Its resistance DECREASES as the temperature INCREASES. If you unplug the wire(s) from the sensor, the gauge should read cold. If you touch the wire to ground, the gauge should peg and the light should flash. During your tests, if the blinking light is ever activated, remember that you need to reset the system by turning the key to the off position. If it passes this test, you know the wiring and gauge are working properly, and you might have a bad temperature sensor.
Just keep in mind that this system is SIMPLE. This is not rocket science, and it is almost unheard of that multiple failures occur simultaneously.
It is a good idea whenever you are attempting electrical repairs to have one of our Bentley Repair Manual, and to study the electrical wiring diagrams. There is a nice section at the beginning of the wiring diagram section that explains all of the symbols and common circuit types. It is worth the read.
Good luck. Take two aspirin and email me in the morning.