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Coolant comes out around the thermostat and Checking Engine light on

Yes, for two reasons, in your case.

1. It will be a bit messy if you don't.

2. You need to also inspect the head surfaces where the t-stat seal mates flush with the head. The leak might continue, despite a good rubber seal and tight bolts, is there is corrosion, pitting or a crack at the opening on the head.

that's why you need to drain a little coolant and work with dry surfaces for proper inspection/remedy.

If you don't drain off some coolant, you'll be left with a pool of it in this opening as this is the "high water line"

If you can access the drain valve on the right side of the engine block, hook a tube to it and drain about a quart or so into a bucket.

Or, if you have a turbo and can't get to the drain valve so easily, (or, this is an alternative), you may loosen and partly remove the lower radiator hose.

This is a fast method which can dump lots of coolant quickly. Still, you can control it.

If you have a plastic tank rad, be careful not to crack the neck. After loosening the band clamp fully, use a bit of penetrant and a twisting motion ot unstick the hose. then pull it back and up so just the lower lip spills the coolant out. Control flow as needed.

Up top, no need to remove the hose at the t-stat housing. 10mm socket on those bolts, then pull off the hose, housing and t-stat together. the t-stat will like be stuck into the housing, so, look fot it there.

Remember to install the engine lifting bracket before bolting things down.

Can't recall the torque spec for those bolts. Isn't much. Around 7-9 inch pounds? I use a stubby ratchet and just the first two fingers worth of "twist"

Observe the way the t-stat is instaled. The side with the little brass "rattle valve" should be up and I put it (valve) at 12 O'clock, which is the highest point of the system.
--
1989 740Ti 1986 240DL 1984 244GL






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