The computer is detecting the on and off condition of the sensor but isn't detecting the appropriate current levels as the coolant temperature rises or drops.
Something in between isn't registering. The only thing in between is sensor in place and operating.
DP - Since you have an 88, have you tried making the LED Impulse Box? The manual is not clear, at least not to me. As I mentioned in your other Duty Cyce/ bad O2 thread, I know what I have to do with a 92 Calif car to get into Duty Cycle mode. I have a DTC ( stored codes) and the Button/Led. To get into Duty Cycle mode I have to get and clear any error codes and then hold the button for 4-6 seconds, I know I am in DC mode when both the LED and my check engine light is on ( key is on, engine running ). This applies to Calif cars, 88 up and USA National cars 91 up.
IF I am even close with an 88, you have the X11/4 box at the battery but no Button/Led.
For you there's no DTC or storing of codes but the are current codes showing what ever IF any errors but to retrieve them you need the Impluse LED box.
It doesn't say but I assume once you turn off the key the codes are gone each time and that would be one way to Clear.
For you and why I don't see why one needs the box in the first place, if you see a Steady state at the X11 , for example 50, that's an O2 error. When you pulled the coolant sensor you got what, 30 which is the coolant sensor error. And there are codes for 10, 20, 30, 40 and so on.
Now the manual does say, push the 100% IR button on the Lambda Reader which you or no one else is using. No clue what the button does. Is it doing the same thing pushing the button on the Impulse box? I am just wondering how the no calif version gets into Duty Cycle mode.
I would assume you have to fix any errors first and just like a Calif version, you have to clear after the fix. This applies to testing as well, as IF you pulled a sensor during testing, that's an error and when completed you have to clear.
This is one of the downfalls to the manual as it's not always clear what to do. Just trying to learn, we need someone who have built and used the Impulse box.