You say the resistance measured across the sensor DROPPED as the water heated?
That's the reverse of what should happen. As temperature increases so should the resistance. I remember doing a practical in A-level physics measuring this. A coil was immersed in a bath and resistance measured over a range of temperatures. It was a standard practical in a long list covering the whole range of physics. Mechanics, electrical, heat, radioactivity etc.
My guess is that your sensor is worth changing. Also try immersing it in boiling water whilst connected to your car temp gauge remembering a small temp drop from boiling. Clean all contacts in the circuit as dirty ones can have higher resistance affecting the current/voltage your gauge receives thus misreading.
Here's a link that describes this
https://www.bbc.co.uk/bitesize/guides/znh7382/revision/8
