Passenger side (rt) of engine, middle. Be ery careful tightening the bolts so you don't break the pipe. Locate thermostat with jiggle valve facing up.
It is very hard to bleed air from system when refilling. see files if you don't have heat when done.
go here too
http://groups.yahoo.com/group/villagerquest/
Housing
Removal
Installation
NOTE: Make sure the thermostat housing and mating surface are clean of dirt and old silicone.
NOTE: Apply a 2.0-3.0 mm (0.079-0.118 inch) bead of Silicone Gasket and Sealant F7AZ-19554-EA or equivalent meeting Ford specification WSK-M2G343-A4 to the mounting surface of the water pump.
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