Very straightforward to do.
Remove the undertray
Drain the old coolant from the drain point bottom nearside of the car
Remove the bolts holding the coolant pipe that has the theromostat behind it
Replace the thermostat and pipe
Tighten up the coolant drain point
Mix the fresh coolant (from the dealer or specialist) with water to the desired ratio shown on the bottle and refill the system.
Run the engine until hot, and check the levels
The official workshop procedure mentions removing the alternator, but I found this wasn't necessary on my PD130 engine.
Quattro Rep, what sensor reading are you comparing it to?
Channel 51 is the adjusted temp, which isn't really a reading, and channel 49 is the actual temp sensor reading.
I think the gauge and the digital temp sensor take their feed from the same point, so with my thermostat problem, the open thermostat just never allowed the water to heat up properly, and the gauge and sensor matched.
A gauge that read different to the sensor would most likely be a faulty gauge or dashpod problem I'd have thought.
With yours being so erratic, and if the sensor reading and gauge are jumping around in unison, then I would suspect the temp sensor giving erratic readings..?