I would very much recommend not to drive the car until you find out what is causing the car to reach a temperature serious enough to cause a Stop light illumination. Continued use at those temperatures will cause major damage to engine components.
You mentioned that you have drilled a hole in the thermostat, this shouldn't need to be done as the complete thermostat and housing can be bought from ECP for about £7 and there is a bleed screw on the engine block where the thermostat is located (1 of 3 that you need to do). It is very important that this part of the system is bled correctly, if there is an airlock in this area your temp sensor will read incorrectly and the thermostat wont open thus no coolant flowing to radiator. Hense why it works fine when the thermostat is removed.
If you are absolutely sure that you have bled the system correctly and thoroughly (according to the Haynes manual) but continue having problems I personally would be investigating the radiator cap, verifying the HG was skimmed and installed correctly and considering a coolant system pressure test. It can take up to three engine warm-ups (90 degrees) and cools downs to get a decent indication that all air is out and coolant level correct.
You mentioned that you have drilled a hole in the thermostat, this shouldn't need to be done as the complete thermostat and housing can be bought from ECP for about £7 and there is a bleed screw on the engine block where the thermostat is located (1 of 3 that you need to do). It is very important that this part of the system is bled correctly, if there is an airlock in this area your temp sensor will read incorrectly and the thermostat wont open thus no coolant flowing to radiator. Hense why it works fine when the thermostat is removed.
If you are absolutely sure that you have bled the system correctly and thoroughly (according to the Haynes manual) but continue having problems I personally would be investigating the radiator cap, verifying the HG was skimmed and installed correctly and considering a coolant system pressure test. It can take up to three engine warm-ups (90 degrees) and cools downs to get a decent indication that all air is out and coolant level correct.