Eera said:
There may be airlocks in the cooling system so at least in XU engines the water (or coolant..) must be filled (after change of cooling liquid) with so called "Peugeot top feeder" i.e an upside down plastic bottle without bottom to fill also those parts of cooling system, which lie higher that the cooling fill cork.
Eera:
I have only had to use the upside down bottle on Pugs without the header tank. My 205s have a header tank, so all that you have to do is unclip it & suspend it higher up. Perhaps a bottle in the header tank where it is also works, I don't know.
dixiefried:
If the light illuminates, yet the header tank has coolant to the right level, then either there is air in the cooling system or else the sensor is faulty.
The sensor is on the side of the radiator at the top, it can be unscrewed to examine it. Likely failure modes would be a leak into the float or else deposits blocking its movement. Once the sensor has been removed some coolant will get out & air get in, so you would have to bleed the system. But if the light is occasional & associated with movement of the car, then to my mind it is far more likely air in the system - so you need to bleed it anyway.
Bleeding the system means filling it with more coolant while letting any trapped air escape. To do that you need to fill it with a little pressure. You do that by taking out the header tank bottle & raising it. The bottle is fixed by a thick elastic band. You may need to remove one or two clips to free enough of the pipe the tank it is attached by. Then either hang the tank from the raised bonnet or just have a friend hold it up for you.
Then you need to open each of the bleed screws to let any air escape. When the air changes to coolant then close each. There are usually two screws, one metal one on the engine near to the thermostat housing that you open with an Allen key, the other at a high point on a rubber hose, that you open with your fingers. Once both screws are closed, try squeezing the thicker rubber coolant pipes, to move any air bobbles left around the system to a bleed point. Repeat until no air comes out of the screws when you open them. All of this time do not let the header tank become empty, or else you will have to start again!
When I had this problem & tried this it did not work! I was then able to find that the problem was that the header tank was blocked with sludge at the bottom, I cleared that, did it all again & all was well. Yours may be simpler than that.
Good luck