flashing engine temp gauge with varing low numbers displayed on 1988 Volvo.

What is your question?

I have a 1988 740 turbo. It was about 30 degrees and snowing and a light came on, on what I assume is for the engine temp (left side above gas gauge). it was flashing then just stayed on. Numbers on the gauge varied between 2 and 30. The heater would not work and the engine was beyond sluggish. Im not to familiar with Volvos (and not a fan) ive never seen this on any other car. This is a $500 car with heaps of problems. What causes this problem and will the car just die if ran extensively like this? I have replaced tons of parts on this car including the water pump which seems to be leaking again. The resevour is still full of coolant.