I have an 82 240dl. Lately my thermostat is acting up, and since I am not a very knowledgeable mechanic, I figured I would ask on here. It seems that quite often the temp gauge inside the car reads that it is pretty hot... about 3/4 to 80% up the gauge near the red line. When I turn on the heat though it comes out luke warm at best, I have seen it cold also. I was wondering what my best course of action was on this?

If there is a little hole in the thermostat'plate', rotate the thermostat to position it at the top.

The problem is best analysed by tracking when it happens...
(these are general guidelines only)

on the freeway can be water pump not the fan

going slow uphill blockage of radiator passages or water pump.

stop and go arond town could be fan or fan clutch gets better at speed

Gets too hot right away frozen thermostat

Since the heater is cool, I would suspecty low coolant, or weak water pump output....Grab the nose of the water pump, and see if you can wiggle it up and down, If you can, it is Borked...You may have to remove or loosen the belt.

Sometimes it's hard to see the coolant level on older reservoir tanks that are darkened with a coating of "crud".
That erratic temperature gauge reading, coupled with insufficient heat, may just mean that you're low on coolant -- the thermostat opens and closes, letting steam escape, varying the sensor's reading of the temperature, but the low level is insufficient to deliver enough hot coolant to the heater core.
But in any case, also change the thermostat -- it's something good to do every couple of years, and you may find that it's really badly corroded anyway, especially if the coolant has been low for a while and therefore isn't immersed all the time. A full cooling system inhibits corrosion by displacing air (which has oxygen), whereas a partly full cooling system allows entry of air (oxygen), hastening corrosion.

Is the coolant (antifreeze) at the proper level?

Two symptoms of low coolant are:

-- High indicated engine temperature (not enough cooling), and
-- Low heater output (not enough coolant to circulate through the heater core).

--
Don Foster (near Cape Cod, MA)

replace your thermostat. That sounds like the problem, it is easy to do, just be sure to have some rags handy because you will spill some coolant. In case you don't know where it is, it is on the top of the engine, near the front, a coolant line runs right into it inside a metal housing.

I am pretty sure this is the same on your B21 as it is on my B230.

thanks! I will check all that was listed... I am gonna start by filling coolant and replacing thermostat