Thanks for the info Dan. I found a good explanation on what the thermostat setting and temp gauge/switch setpoint should be for raw water and fresh water cooled engines on a Yanmar help website. http://yanmarhelp.com/s_faq.htm

I pasted the applicable Q&A below.

Q: My engine thermostat is set to start opening at 105 and be fully open at 112. I think this is much to low but it is the original stat from Yanmar. The oil never gets hot enough to burn off the byproducts of combustion. The temperature gage never gets over 100, even after motoring all day.

A: A salt water cooled engine operates at about 55degC / 130degF., you can keep your hand on the cylinder block while the engine is running. If the temp goes over this the salt will precipitate out of the water and restrict the water galleries at an unacceptably fast rate. Also, because of this, the alarm operates at 62degC / 144degF. The raw water cooled engine thermostat starts opening between 104 -112deg F and is fully open at 125deg F. Because the reading is quite low gauges are often inaccurate, and may be a reason yours only reads 100degF most of the time. Most gauges are the same except test gauges which are not practical and very expensive. Even with freshwater cooled engines, that operate at higher temperatures, the oil retains the byproducts of combustion and always looks black. The best way to help get rid of contaminants is to rev up the engine for a half minute (over 3000rpm), out of gear, before moving the lever back to idle and shutting down. Do this at the last stop of the day if stopping and starting a lot. Also run the engine at 3000rpm or over for 10 minutes or more, for every 5 hours of slower running. 2000- 2500 is very slow. The engine will prefer 2800rpm or thereabouts.