Why could this vehicle be overheating

I just bought an E 350 van with a 5.8 L engine. It ran fine this afternoon. This evening the temp gauge was fluctuating between just over the mid range to almost the red line. When I got to 60 mph, the gauge read almost into the red. I let off the gas then accelerated and the temp went down to almost midrange again for a few seconds, then right back up again. The oil isn't cloudy. It's not leaking anywhere. No water through the tailpipe. It does have straight water as the previous owner put that in instead of antifreeze (I just bought the van today). I'm thinking either thermostat or water pump? Please help.