1986 BMW E30 over heating issues?

My son bought a 1986 BMW E30 2.7 ltr (I don't know why!). We replaced the head gasket on it, and since then it starts, and runs good for about 20 mins. than it will over heat, and go into "limp mode". I'm thinking the thermostat is bad, and he is convinced it's a bad temp sensor. I have been working on cars for 20+ years, and he just graduated from Wyotech as a mechanic. Neither of us is experienced in BMW repairs, so does anyone have any suggestions as to what we could check? Either of our ideas could be the issue, but the temp sensor (he says) has continuity so he thinks he ruled that out. He hasn't tried my idea yet so we don't know for sure that's the problem. (Right out of school, he obviously thinks he knows it all!) LOL But if anyone could confirm, or deny either of our ideas that would be great. If you have another idea that would be even more awesome. So thank you in advanced, and please help...this is an annoying issue for both of us!