Temp Gauge Flucuation

Hello, I have a 1997 Explorer, automatic 3.6L V6, XLT, with 127,000 miles. Recently the temperature gauge has been flucuating from cold to hot rapidly, causing the check gauge light to come on. The vehicle does not seem to be overheating at all. The gauge rises and falls quickly and continuosly through the drive. The A/C system went out over the summer, and the blower fan runs constantly even in the off position. I've recently replaced the thermostat, fan clutch, and radiator cap. I am unaware of any large leaks besides a rear seal that smells different than burning oil. My mechanic cannot figure out what to do with the car and has only offered many expensive options. What can I do to correct these problems? Thanks for your help!