Running Hot Temperature gauge is running hot, can see steam from over by radiator, but is looks like its coming from bottom of car. I replaced the top hose that runs to radiator, but didnt solve problem. Gauge runs hot when heater is on. Could it be thermostat? Is there another hose that runs from bottom of car to radiator? Where is thermostat located on 1995 subaru legacy?

Difficult...

Running hot would come down to a blocked radiator, a collapsed hose, a faulty temperature sensor or a cylinder head/gasket problem.

it could also be the gauge or even a bad earth on a temperature sensor.

Does your car exhibit any signs of overheating .. steam .. boiling radiator ... rough running?

It's strange that it runs fine for a couple of weeks and then runs hot. To me that suggests a temperature sensor/thermostat problem coupled with the outside air temperature.

What did the workshop suggest?

Did you put the thermostat in backwards? If you did, it wont open when hot. Thermostats look pretty much the same - with some minor variations. It's important to note the the side with the spring should be facing the (hot) engine and the other side facing the (cool) radiator as shown in the image below. If the spring side doesn't get hot - it won't open to let hot water from the engine flow to the radiator for proper cooling.

1) Is it really running hot, or is the temperature sending unit or gauge incorrect? You could use an alternate temperature sensor to test - infrared temperature gauge.
2) Just because the radiator was cleaned out doesn't mean it isnt blocked. Check to see that water will flow through the radiator.

Is the thermostat opening? Either take it out and test it in hot water, to check if it is opening, or just replace it.
Is the temperature sender unit faulty? The engine temperature might be fine, but the gauge may be getting lied to.
Check in the radiator, remove the cap (not when hot, as if boiling, and the pressure is released it will all want to revert to steam instantly, and will scald with a fountain of steam), and look for scum or oil and when running, check for bubbles and exhaust gas smell in the radiator, these would indicate a leaking cylinder head gasket, or cracked cylinder block, or cracked cylinder head.
Another potential, is that the transmission is running hot (heavy towing in overdrive ?), as the radiator has the transmission oil lines going into the bottom, and is used as an inter-cooler for the transmission oil.
Is there antifreeze / corrosion inhibitor in the cooling system, and is it still active (not expired), as the dissimilar metals in motors, act like a battery (electro-galvanic corrosion), this will cause pin holes of corrosion to eat through the cylinder cooling jacket, and allow hot exhaust gas / oil / coolant to mix. All engines, especially modern ones, need antifreeze / corrosion inhibitor, and prferably deionized water, so that the coolant is not an electrolyte.

Thermostat temperature senecer needs to be replaced

Your radiator is clogged, there is not enough flow thru the radiator to keep the engine cool. A radiator shop should be able to flush and clean it, just beware that when radiators get clogged for a long time and there cleaned, they tend to leak.

it seems as if there is a clog in the radiator, flush out coolant system and see if this helps.usually when top hose is hot and bottom hose is cold there is a clog somewhere in system. check radiator and make sure coolant is circulating. hope this helps carl,

it may be a little off, but the lower water hose seldom gets very hot,, as its this hose that suplyes the engine with ""cold water"" the hot water comes out the top hose,, drains down the rad and cools on the way down then enters the engine through the bottom hose """if your engine stayes running in the normal place on the gage,,,and not over heating""" why are you spending money for nothing???""
you wont get the bottom hose to run hot unless the engine is cooking

That's probably coming out of your coolant return bottle. With rad cap off & engine cool, look at your level in the rad, if necessary top it up to an inch or so from top. Start engine, turn heater(not defrost) on and let it run until up to normal operating temperature. Keep an eye on temperature gauge & rad level. When it's at normal, watch for good flow going through rad when thermostat opens. after flow slows down,(thermostat closes) top it up if needed. If you watch 2 or 3 times for flow, and gauge doesn't go over normal, then put cap back on, then fill bottle only to mark for warm or hot engine, with coolant. If gauge goes up over normal from there, replace thermostat, and I'd get a new rad cap too. If that has electric cooling fan, make sure it comes on shortly after you see thermostat open & coolant flowing through rad.

Faulty temperature sensor I think, thats what feeds the gauge. If the vehicle is genuinely running hot there would be a lot of pressure in your radiator causing overflows/steam/coolant smell.
Those sensos wear out and commonly go to short which shows a higher & higher reading until they fully short out
...hope that helps.