The Motronic ignition system is a pretty interesting system and as our cars get older, we'll probably find ourselves having to fiddle with little failures. The DME temp sensor is one of them. Essentially this little sensor provides the motornic computer with a sense of engine temperature.

It is a $20 part, so most times we just change it but here is how you might go about testing one if you so choose.

First, the temp sensor can be removed without draining the coolant. Its best to have an old one to quick slip in place of the one you're removing though to prevent slow draining of the some coolant.

First a good rinse, then into some luke warm water.

Bringing up the water temps and observing the resistance. 

As the water temp increased, both my old and new sensor resistance reading changed.

Conclusion, both sensors are good.