You are correct, 160*F is too cold. You want it closer to 200*.
Thicker
oil (higher viscosity) tends to run a little hotter, as it takes more energy to move around. But it's a small difference, not enough to really matter. If the
oil isn't warm enough, then look somewhere else.
How is the
oil cooler bypassed? If it's an oil thermostat, then about 10% of the oil is flowing though the cooler when it's cold. As it warms up, that ratio changes. I would consider completely disconnecting the cooler.
Maybe the gauge is incorrect? Use a infrared thermometer on the oil pan to compare it to the dash gauge. They should be pretty close.
Oil is mostly heated by rpm's. If you're not road racing, there's no need (and some detriment) to using a cooler.
I'm not a big fan of 20w oil for a street engine. On cold start you want the oil to be as thin as possible, so it gets to all the important parts as quickly as possible.
The hot viscosity should be enough to maintain proper oil pressure, and that's it. it takes energy to move oil around. The thicker the oil is, the more energy it takes.
For example, in a Windsor, too thick oil can cause the distributer gear drift pin to shear. And if using a poly or bronze gear, it can wear it out a little quicker.
All my street engines us a 0W or 5W oil. Many modern street engines - like the Coyote - are designed to run on a 0W-20 oil.
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