A '92 Bronco has two (2) coolant temp sensors- one for the computer, and one for the gauge.
The sensor for the computer has two wires, one green and red, the other gray and red.
The sensor for the gauge is a single wire, colored red and white.
If you take the wire off of the gauge sensor and ground it (the wire, not the sensor)- which is what you did with the test light, if you had it hooked to a ground- the gauge should move to its max hot reading. If it does, the circuit and gauge should be fine. Check the ground at the sensor body by doing a voltage drop test to the battery. It should read "0.00", or pretty damn close. You may have a bad sensor out of the box; it happens more than you might think.
If I remember correctly, temp does not
effect fuel trim until the vehicle is in closed-loop, but I would still fix that two-wire sensor and connector that's broken, anyway. Temp is one of the biggest inputs for fuel trim, and with that sensor disconnected your gas mileage is probably in the toilet.
Oh, and my wife is from Appleton, too.