After picking up my 1996 855 5 speed today from the dealer, the check engine light came on after about an hour of driving. I returned to the dealer who got 2 codes:
Misfire in Cylinder 1
and
O2 Heater
He told me that it might just be due to the car sitting for some time and reset the codes and told me to bring it back if the light came on again. I noticed later that the temp was sitting at about the 4 O'clock position when cruising and only got up to 3 o'clock when idling or when downshifting.

The light came back on tonight. I wonder if there might be a correlation between these symptoms. Is the faulty thermostat causing the engine to run rich and fouling a spark plug and causing the misfire? I don't yet know what the codes are that set off the light for the second time, but I am willing to bet they are the same ones as earlier today.

Any one have any insight/advise?

no. The thermostat should be changed and the 02.
Bring it back and get them to change it.
Check your vac lines too.. or at least get the dealer to check them.
They'll probably try to avoid changing the 02 sensor because of the cost and will give other excuses to changing it. Insist on the change. Maybe even watch them change it.

So you think that the O2 sensor is definitely bad? Which one do you think this code is refering to? Do they both have heater elements?

What about the misfire - do you think that it is in some way related to the O2 or thermostat conditions?

Thanks for all the info.