1993 Mercury Villager thermostat replacement- where is it located and instructions?

I can't find a picture, but it is on the right side of the engine, upper engine area, at the end of the upper radiator hose, mounted in coolant outlet housing.

As far as the heater hose, my GOD!!! it cost about 50 cents per foot. As far as the temp gauge, does it drop as soon as you turn the vehicle off or does it take a lot of time? Also, make sure there are no air blocks in the system. That can cause this problem.

In response to your reply, the tempaerature drops 20-25% within two minutes after I shut the engine off. Upper radiator hose is very hot and seems to be pressurized. Fan turns on fine, and I replaced the radiator. No white smoke or water in oil/exhaust- seems to run fine even when temperature increases to hot on gauge. I'm thinking "replace coolant temp sensor"? Appears to be a lot of pressure when I attempt to take off radiator cap after I shut off engine. Water pump doesn't appear to be leaking either. I may have a leaking head gasket (oil leak) but I doubt if the head gasket is blown. My concerns are circulation and whether the heater control valve gasket replacement was done correctly by the repair shop. I am hoping the temperature problem is just sensor or sensor connection related. I appreciate your feedback. Thanks.

It is normal for the system to pressurize when it warms up. Don't open the radiator when it is hot. You could get seriously burned. When the temp gauge says hot, is the coolant boiling? If not, I would try the temp sensor. It may be bad. Also, it could be an air pocket in the system blocking it to overheat.