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LOSING COOLANT, 2000 Passat Estate 1.9 TDI SE (115)

Hi all,
I'm new here, and sadly my first post is a negative one. I've just purchased (on Monday) a rather fine specimen, in green, with cream(ish) cloth interior, 142k miles on the clock, with full sh, in pretty mint external condition, no rust. Now Ive driven the car, it has no knocking noises, the engine, suspension and gearbox are all in good condition afaik. She's a pleasure to drive and still pulls hard for a 14 yr old estate! Am I correct in thinking it's a 3B5? It's the 1996-2000 model.

I bought the car for my dog walking business, and it's perfect for the job! Only problem, I topped up the coolant with water and antifreeze, just above maximum level, then took a 30 minute trip to Stamford from Peterborough to show my parents the new whip. Upon closer inspection, the engine was getting very hot under the bonnet (temp gauge didn't go above 90 degrees or half way) even when driven exuberantly (I'm assuming this site doesn't condone figures but we all know what exuberant means)
However the coolant levels had dropped to the minimum level. I changed the oil and filter myself on Monday, and the engine sounds and drives just as it should. However the garage I bought it from told me they were changing a temperature sensor, as it was coming up on the dash. It might be related?
My partners dad thinks it's the thermostat not opening properly so we're going to take it out at the weekend and see if it's working by dropping it in boiling water. Other possibilities; leaking or lose coolant hose? Leaky radiator?
Any help and all suggestions appreciated! Thanks in advance.

P.s if this is too boring for anyone, feel free to tell me how much power I can expect from a remap, and how much power I can extract from the engine reliably. As I'd like to map it for more economy and torques! Any idea about lowering comfortably and if I can get bigger wheels without ruining the comfort too much? It's for work after all.

My toy car is a mk6 fiesta st, with mountune exhaust (used to be a full piper decat system) pro race 1.2 wheels (used to be candy apple green) lowered on spax -45mm springs.

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