First thing is your thermostat has been buggered for a long time...if its only sitting in blue than as been said its stuck open...which in turn the car thinks its cold and will burn more fuel....You will need to replace that.
Secondly try doing the following procedure..follow each step exactly
How to bleed the cooling system.
1.Jack the front of the vehicle up onto stands as high as possible,
2.Turn the ignition on,engine off,heater on fan setting 1 and temperature fully hot,
3.Remove the rad cap/expansion cap,remove the bleed screw from the radiator and IF you have them the bleed screw(s) from the thermostat housing/top hose, return pipe or EGR thermostat.
4.Fill the radiator up and keep pouring till there are no more air bubbles coming out from the bleeds, using a funnel that fits tight in the radiator neck and filling it full of water will help push any troublesome air out, when good you can then install the bleeds and tighten down(don't snap them),ensure the rubber O-rings/seals are still on the screws/on the bleed holes.
5.Suck some water out so it's not full to the brim, replace the cap and then start the car. Run her up and check for heat from the vents when warm and check if over heating still persists. You may have to bleed troublesome cars twice(but rare).
6.If all is good then check the water level again in the morning when cool.
Third..check that your waterpump is ok you may need to replace this too and you will need to replace your radiator cap.
Fourth get a sniff test done.This will show if you have a blown head gasket or cracked head...If you have a cracked head then its easier to replace the engine than it is to get the head skimmed and replaced...a lot have tried and failed miserably.Its the fact that once the head is off it is f*cking difficult to put it back as you will need arp bolts because the original holes will undoubtedly be threaded.As a side note the M52 engines don't like overheating...not as trusty as the M50 block...
