OK, have you changed the oil? a milky white oil is often your best indicator of a blown head gasket. You can get into compression checks and what not, but that takes a while to do and is not recommended unless your with someone that has done it before. the thermostat is burping (letting air out) dont fill it all the way, just fill it until you can see the antifreeze, then wait, it will go down when the thermostat opens. also, get it up to operating temp. (the temp gauge measures water temp not block temp) so drive it for 15 minutes, and then as redneck as this sounds put it to the floor. it is good for it to be done sometimes but not everytime you drive it. just to get the engine working a little harder, and get the rpms up.
let us know what the oil looks like when you change it. i would suggest that first.