Thermostat Bad?

I just put my engine back together after having to change the head gaskets and the transmission. Started up fine but without the heat/AC on full blast, the fan does not come on. I can jump the sensor to make it turn on. So I decided to run some Prestone flush and water to clean it all out before I drive, i let it sit idle for about 15 minutes and POP the radiator inlet hose flys off and all this pressure comes out.

So is my thermostat not opening? How can I test this? I'm not sure why the car would overheat otherwise. I can easily replace it- I know some people recommend going 160* while others are still saying use the 180*.

I went ahead and replaced the thermostat today with a new 180* unit. I made sure the spring side faced towards the manifold and put the thermostat in the water neck first, then the gasket. Used tack sealer on both sides of gasket, torqued to 12/ft lbs. Only took about 30 mins to do, easy to change if i have to later.

I had a do or die situation where i was in the middle of an oil change for my other car and it turned out the filter i purchased was incorrect, so i had to chance taking my mustang to the auto store about a mile away. (I suppose i could have rode my bike but.. lets be dangerous toady) I felt like it was running hot the entire time. The temp gauge on the cluster did not work at all. I propped the hood while i was in the store to let it cool as much as it could. I drove it back home and right as i was about to turn into my driveway the car shut off. I opened the hood, nothing exploding or anything so not sure why it shut off but i could feel the whole bay was just really hot. I had the heat on to keep the fan going because its not cutting on by itself. I have bypassed my heater core also.

Any ideas? Is my temp sensor bad? It worked last year before the rebuild. I just have a hunch the engine is running way too hot. I would like to get a good radiator cap with a temp gauge on it and also an aftermarket temp gauge to run to my holley manifold. It already has a extra sending unit on it so it will be easy to hook up, I just need an adapter plug.