Upper hose is collapsing!

My money is on the cheap overflow hose collapsing under vacuum.

Replace with a stiffer hose, or at least disconnect it altogether to see if this breaks the vacuum.

The thermostat cant be the problem because its only function is to keep the block from running too cold.

Also, do not put a higher PSI cap on your radiator than what is called for. Unless you like replacing radiators. :)