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You can put a heat strip on the engines head (like some remanufacturers do) and prove if an engine has ever overheated. When you get a FAKE OVERHEATING MODULAR replace the CHT sensor.
Ever wonder why Ford used this sensor? A coolant sensor that contacts coolant will go back to reading normal when the coolant leaves the system and some continue to operate engine to its harm not knowing to check if their heater works to let them know that coolant is still present.
Ford implemented an CHT sensor that tells the temperature of the head's metal when it is functioning properly. That way if coolant is lost you can still know the temp of the engine. When your gauge first goes to normal operating temp range after a cold start turn the engine off and check the water temp and you will see/feel that the water is still cool. You will have learned that the sensor is checking cylinder head metal temp which will get warm before the water will.
Another reason an CHT sensor is needed is for an ECU to implement fail-safe cooling because a coolant temp sensor would not work for this strategy.
You can see how a malfunctioning CHT sensor can give you problems when you know that the engine is not overly warm. Limp-home mode, A/C cutting out, false temp gauge. Hope this helps.
Really good point Jesse...
Coolant temp sensors only read the temperature of the coolant and are terrible at reading the temperature of air. So when there is an air pocket, the indicated temperature generally does not return to normal - but actually will have a value of below normal (cooler)...
There had been several RV owners (with V-10 engine) reported either in V-10 forum and/or Super Duty Forum that they were having false-overheating problem. If I am not mistaken, some of them had already replaced the CHT sensor without any solution to the problem.
I do not recall any of them reporting back for a permanent solution.
I had this same problem on my 05 5.4 and the info center would read "check gauges" and the temp gauge would be pegged, I would shut the engine off and it would reset the gauge, I changed my thermostat and haven't had problem since