Hello there Phil..
Thank you for your reply and further info..
Ok - well - given the symptoms you describe - and this being the engine it is - I have to tell you that these do suffer with failed / or failing water pumps.. What actually happens is the impeller on the back of the pump , its made of plastic basically, and they break up- they can break altogether and then the engine overheats - or, they can break and come loose on the spindle which means it will continue to pump water round - so it wont overheat - but its not sufficient to keep the cooling system in proper working order...
So thats one and probably the main consideration here - Given the mileage - its a big
possibility combined with the symptoms you have... so that needs to be checked / changed .. You have to rule that out at least ...or of course, thats the issue confirmed when its checked..
On these engines, they do pressurise a lot - so its not unusual to get back pressure in great measure - and its normal for the coolant to drop and rise as you describe - any engine will do that if you undo the cap like that ... so thats ok..
Now - if the water pump is ruled out, and you still have the problem - then you most likely have either a leaky head gasket and / or , a porous head.. cylinder head.. Both of which do happen on these.
Of course this entails a lot more work so it would need proper tests next before carrying out such work. Most good small type garages have test kits for these issues... one such kit should you wish to do it yourself is HERE
.. click the link.
It doesnt take much of a leak at all in the gasket or head on a diesel engine because of the extremely high compressions on a diesel as opposed to a petrol engine - a petrol engine can "get away" with this - but a diesel will pressurise the cooing system a lot more - giving what you have there.
That will tell then where the fault lies thats causing your problems with this engine Phil..
Let me know if you need anything else-
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You can and are most welcome to get back to me anytime you might need - clicking the OK ratings does not close you out at all..