From what I just went through, I would say air is getting into the system. Check the lines from the coolant reservoir (make sure it has coolant in it too). Rad cap might also be a cause of air in the system.

Are there any coolant leaks?

When you switch the temperature from hot to cold, does it get cold? Are the linkages for the blend door working?

Pop off the rad cap, run it to operating temperature and don't stop running until you don't see a single bubble coming out of the filler neck. At the same time, keep the coolant level just slightly above the passages so you can see the bubbles and air isn't getting dragged into the rad.