As you drive, the temp gage goes all the way up, then back to normal constantly, 1994 mercury sable

Probably thermostat failure

The second picture down on the left .copy and paste the below site.
https://www.google.com/search?q=1998+mercury+sable+temp+sender+location&client=ms-android-americamovil-us&prmd=sivn&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiu9bev5sjVAhUExoMKHUzIDdcQ_AUIEigC&biw=360&bih=513#imgrc=byCw3mkwV_fgOM:

SOUND LIKE THE TEMPATURE SENSOR IS BAD REPLACE IT WITH ONE THAT THE CAR RECOMEND. IF THE CAR ENGINE IS HOT :CHECK THAT THE FAN IS PRODUCING ENOUGH AIR THRO THE RADIATOR IF OK THEN CHECK THAT THE THERMOSTATE IS NOT THE FOULT.

have the cooling system checked for air lock
will be a gauge sender not a sensor

Has anyone tested the new temp unit to make sure it's functioning properly? Or is their possibly a mechanical thermostat in it that's hung and needs to be replaced?

water pump or thermostateis stuck or cloged

this is possibly a loose eleectrical connection at starter battery or alternator check tightness clean connections

http://wiki.answers.com/Q/How_do_you_diagnose_and_fix_heater_blend_door_problems_on_a_Ford_Taurus_-_Mercury_Sable

U have a problem with the air temp control blend door actuator motor, very common failure. In order to replace this part the dash must come out.

Yes, your sable has a thermostat, and it sounds like it needs to be replaced. Are u sure the temp gauge is broken? It may be that the thermostat is stuck open, which won't allow the engine to warm up, which in turn would show low engine temp. and result in no heat. Even the gas fumes could possibly be a result of the car running inefficiently due to running below operating temperature. So, replace the thermostat, and u may solve all your problems.