Backflush your heater core. If there is anything other than liquid in the cooling system (like sealant with metal bits) then it can clog right up. I had no heat until I blew the thing out with a garden hose. Just hold the hose against the outlet from the heater core and turn it on.

 

you bought an engine because you didnt have heat
"i went through same thing with my disco, i used a vacuum tool to bleed the air from the coolant system to no avail. replaced head gaskets thermostat and water pump. i ended up buying a used engine since i feel that there is a leak between the block and cylinder sleeves."

 

All the best to your guys for the new year.

In regards to the overheating --
Your thermostat has jammed shut.
No circulation.

Get the low temp Land Rover thermostat for this rig
Atlantic British has it - about $75.

You have the pump off - so replace it with new.

I hope you did not toast your engine.
These are delicate like butter in the hot sun.

I replaced the tstat in mine - radiator. I did not replace my WP yet.
I got my Rover at 96,000. Did the heads two years ago and new t-stat then.
Rad one year ago.

No regrets.
I don't drive it much. Just to work and back.
Works fine for me.

Put in a Nissans radiator from Rock Auto.
then you are totally solid.

 

When working on a heat problem with a D2 you are at a disadvantage with the factory gauge. It can read the same over a wide range of temps, has a huge "normal" 50% range. With a scanner you can see what is going on sooner. Take a look at these two photos - the needle is in the same place but scanner tells the truth.

 

Flushed the radiator (no gunk or problems were found), replaced radiator hoses, replaced water pump, tested and replaced thermostat. Only thing left is flushing the heater core which i will do today. Did an idle run of the system with the replacements listed above and it seems to be holding at a steady 185 degrees. Still no heat but hopefully the heater flush / backflush will fix that. Thanks for all the support and suggestions