340 overheating problem

The pump is fine.
I've always been concerned with this gauge cause its my only gauge that isn't autometer. :s.
thermostat is definitely working.
My rad cap is 16psi. It is not over flowing when it's hot.

You are leaving one hell of a lot on the table here

You can't assume the "water pump is fine." Unless you know this pump DID work "fine" and is still that way as such. That is, a new pump could be assembled wrong..........with the incorrect impeller and too much clearance behind the rotor

Gauge...........brand does not matter. The gauge can still be wrong / inaccurate. You MUST check it with a second opinion, IE a thermometer

Thermostat.........just because it opens does not mean "its working." Many stat problems are cause by stats that still appear to work, but don't open quite soon enough OR FAR ENOUGH. Buy yourself a high quality stat, take both stats before you install the new one and heat them in a pan with a thermometer.