I ruled out a water pump problem. At one point, early on in this problem, I had the T-stat hosing off and using the remote start (and bypassing the safety hood pin), started the car just long enough to see that coolant did shoot out that opening. I then cleaned everything up and put it back together.

Looks like the ice was concentrated in the overflow bottle (as the person, not me, who was topping it off put the water directly in the overflow bottle and it never made it through out the system in enough volume to create a "ice" problem).

By now seeing the computer is reading 163 when the dash reads 260, and I can touch the engine without being burned and the engine runs fine, safe to say, the dash is incorrect.

 

so, i had a very similar problem in my monte, basically i belive the system wasnt building up enough pressure to bleed the lines, i would try to bleed them, then go for a drive and it kept overheating (it actually was after i changed the LIM the last time a few weeks ago.) one time in particular after bleeding the lines, i was on my way back to the shop, and noticed the temp was 260, so i pulled over and shut my car off. at this point, i was about 1 1/2 miles away from home, and really mad, so i started my car back up and mashed the gas pedal and took off! (stupid i know..) i noticed while my car was accelerating before it would shift, the temp guage would go down, so i drove the rest of the way home in 2nd gear and continued to watch the temp drop quickly. doing that allowed my system to build up enough pressure to push the air out and get the coolant into the system. when i got home i left the car running and bled the lines, worked fine ever since.... long shot i know, but figured i would share.

 

I appreciate the idea, but I had already done what I could with bleeding the system, including driving it for about 15+ minutes (and it should have pressurized, but part of the problem is the current cold weather, it's tough for the vehicle to build up temp on a short trip like that).

Since a Snap-On scanner plugged into and reading the info from the car's onboard computer is showing the computer to believe the car's temp to be 163 (when the gauge on the dash is showing 260), proves I have no air pocket (or at least not one of any siginifcant problem), the temp sensor is working, I get warm-hot air from the dash vents and I know from doing a pressure test, there are no coolant leaks. This is now a problem leading to a failed guage on the instrument panel.

For weeks this has been driving me crazy, but it now makes sense (until this weekend's check of the car with the Snap-On scanner, I was in disbelief the cluster was bad, but that's what signs point to).

 

at 163*F the cooling fans will never come on the pcm needs way more than that needs to be i think 212* something is not okay. but you were saying the fans will come at that temp?

 

NEW Finding (not sure what it means): Last night, letting the car run, I squeezed the the upper radiator hose leading to the T-Stat (again, no pressure). I found while squeezing the hose and revving the engine via the throttle body, the pressure in the hose changed slightly (while revving the hose had less pressure, stop revving it and you could feel it gain a little pressure). Again, I'm certain the T-Stat was closed at this time. Does this spawn thoughts with anyone? My current thoughts are a blockage somewhere (at a higher RPM, the pump can't move enough fluid or air to keep the pressure up)

that is normal when the stat is open. sorry read through this a little more thoroughly, sounds like the stat is stuck open and the temp sensor is faulty. i know you said you replaced it but was it with a gm original or a napa sensor?
more problems are caused by cheapo sensor than you can shake a stick at. if it is a cheapo buy a gm sensor and a 195* stat from an ACDELCO supplier or dealership. they are the best hands down.