So I had to replace my thermostat about 12 days ago since the needle would hardly move at all in our 30's weather. I flushed the system and replaced the coolant with the recommended G12 coolant (the old coolant was clean, no gunk). The car got up to temperature all up until yesterday where it started staying cold again. Is this just a fluke or maybe something else could be causing this? I installed it in the order of thermostat housing:gasket:thermostat with spring side facing the engine.

I used Audi B5 A4 Quattro 1.8T > Search > Thermostat > ES#1899422 87°C Thermostat - 050121113C

 

Any chance you're getting bad info on the dash? When the dash says it's cold, can you get good heat from the heater?

 

It's possible. I still do get heat but it's not hot hot like when the needle is in the middle (maybe it's just psychological). And also today was about 58 degrees out and the needle was about a tick away from the middle after driving for about 25 minutes.

 

Sounds like you're a good candidate for replacement of the CTS (coolant temp sensor). This is the part that reports coolant temperature to the instrument cluster and the ECU. Here's the one I replaced my stock one with:
Audi B5 A4 Quattro 1.8T > Engine > Cooling > Temperature Sensor > ES#1484 Coolant Temperature Sensor With O-Ring & Clip - 4 Pin - 078919501CKIT

 

Is there any way to test it using a multimeter?

 

Perhaps, but I personally am unfamiliar with how it outputs data.

If you have VAG-COM you can easily test is using software.

 

Unfortunately I don't have a VAG-COM. But i have a feeling that it's not the sensor. With the car off after driving the temp goes up to about 2/5th of the gauge and when I drive it, it falls back to 1/5th. And the needle goes up a little if I drive hard. I did this in 60 degree weather.

 

I see why you're putting all together that way. If you want to play your theory out all the way, take the stat back out, put it in a pan of water with a candy thermometer in it (do it while you're wife is gone or you'll be buying another candy thermometer) and heat the water up and watch the stat open at 190 F. If it doesn't open, you confirm your theory.

 

I'll try with the old one I pulled out since it was acting up the same way. I'll post the results.