P0117 code

I got a p0117 code regarding the ECT sensor and the engine being too hot. I just replaced both the temperature gauge and the ECT sensor (the cooling fan was not turning on). The car stays at 50% of the temperature gauge when idling, but when driving it climbs to about 75% of the gauge, then when idling again is meanders back down to the 50% mark. I just replaced the coolant, the radiator cap is in good shape, and the thermostat looks okay (I will talk about this later).

My question is what the heck is going on here? Am I naive or could the thermostat not be functioning properly and so it is circulating some, but not all, of the coolant? Is the ECT sensor bad (the replacement)?

The car is not running rough or getting poor gas mileage. It is not smoking or showing milky oil in the dipstick. I do not think it is the PCM or the head gasket (I am hoping at least) because of what I described at the beginning of this paragraph. I am at a loss as to what it can be at this point, maybe it is the ECT sensor, but then why is the gauge showing it is running hot? Is it the temperature sensor? Is it both? Help!