I solved this one, it was a no-brainer, I had simply not shoved the unit in far enough. Once I did that, the clip held it and it cannot be pulled out. I also have now replaced the temp II sensor with a new unit. I tried to clean the contacts in the plug but don't really see how its possible..
The new temp II sensor came with a new o-ring and I did remove the old one. The coolant sensor I reused the existing o-ring as I know that unit was replaced not that long ago.

Now I have to refill the coolant. I have a jug of Prestone Extended Life 5-yr (green). It says good for all makes and models and can be mixed with any existing coolant. It does not specifically state 'phosphate free'. The last time I did this I used an orange antifreeze, I cannot remember the name of it but it lasted a long time and worked well.
I don't know how much coolant I lost but no coolant was running from the thermostat openings and the refill and overflow tanks are empty. I guess I just refill it a little at a time and run the engine until the level does not go down any more?

David (1987 Wolfsburg)

________________________________