Danny,
What year 261?
What temperature thermostat (did you "bench-test" the thermostat)?
If it is a 1955-2nd series through 1963 261, are you using the original water pump or a relocated 1955-1st or earlier water pump?
If you are using a relocated earlier water pump, you might have a block that has clogged internal water passages.
Other people will chime in with other helpful suggestions.
Tim
