Ok update...
With the help of foul language and kicking jack stands I was able to take out the thermostat and put it back in. Def 2 person job lol. It was tested by boiling in a pot as usual and the thermostat opened up towards the boiling temp (82 C). Valve lift was checked and it was 10mm as specified. So thermostat is doing it's job. I attached a photo of it for those curious about the brand.
Next I blasted the filler neck without the thermostat to clean the engine block only essentially, but I realised because I took the oil dipstick guide out to get the thermostat out, the oil dipstick guide receiver/holder was kinda left open so I don't know if water got into the oil system . The manifold shield however should have kept the water out, but I was too busy blasting the filler neck with ruthlessness...
Anyways refill/bled system as usual, took it for a drive and to my disappointment the engine began to overheat again. Radiator cold once again. This time however I smelt something burnt and when I popped the engine lid there was smoke coming out from the manifold!!! Temp gauge was only above middle for very few seconds. It wasn't like crazy smoke, but definitely noticeable even on today's sunny afternoon. I really hope the HG is okay...
At this point I've given up and gonna give the car to that special place in Richmond. There must be something blocking the coolant to flow from thermostat to radiator. Or water system plumbing was ****ed over by the fitter.
I guess it wasn't a full waste of time learning how to change the thermostat. 
 

The smoke is most likely just from greasy hands while you were working on it.
The next thing you should do is remove the hoses from the radiator and stick a hose to see if water flows down them.
 
Are you measuring how much coolant/water you are putting in?

Tree, yeah that special place in Richmond may be your best bet at this stage.
 
Also FYI I have a comprehensive article on flushing and bleeding the SW20 coolant system. Pm me if you want it.
Also as Dasic said, measuring the coolant coming out and going back is important to use as a double-check.
 

I did a rough measure at the start, it was something like ~7-8L. Reddtarga I think I have that article you wrote it's like 3-4 pages and published in the mag? It helped me last time when I first bought the car and flushed the car, and I'm still using it now thanks for that.
Also couldn't have reached the thermostat without "dasic1" style of leaning the whole body over the car to reach the hard areas so thanks for the idea in your engine drop vid
My dad did spread quite a bit if grease on the thermostat nuts to make them stick to the socket ratchet (we lost 2 in the process lol) and some on the rusty exhaust manifold bolts.
Oh yeh forgot picture

http://imageshack.us/photo/my-images/442/dsc04201r.jpg/
http://imageshack.us/photo/my-images/694/dsc04211kh.jpg/
Is it my computer or has the forum layout changed? Can't find attachment anymore lol. I think I liked the old forum style better 

You can't do it in 'Quick reply'
You need to click on 'Reply to message' and then click on the 'paperclip'

Ah you know what? I think my username has configured itself to mobile version because I logged on via mobile yesterday (when I was stranded and engine overheating so I decided to pass time with this thread but then cbf cos mobile screen too small).
Anyways after getting advice from good ol' IDB, I warmed up the car by idling up to normal operating temp, then purged any remaining air by opening the bleed taps. Also made sure my engine fan was working properly. Radiator was still cold but it wasn't overheating so I took it for a spin, expecting it to overheat as usual. It did of course,  pulled over and waited around 2-3 minutes and drove around again. Temps stabilised and radiator was warming up. It's labour intensive (for me) but changing the thermostat to genuine is probably the last straw. If that doesn't work then I'm selling the car.
Cheers
P.S Kidding but my dad might lol

Are you bleeding the car when warm or cold? I would get a genuine thermostat from Toyota to be safe cause they work the best.

Is that 7-8l your putting in?

Honestly I cbf counting each and every bit of capacity the car is holding, don't really have time for all that. I know eventually if you continuously top up the system it should stabilise lol.
The only time I was bleeding the car hot was when Ian told me (as a last resort for bleeding air) otherwise it's usually done cold. I follow Reddtarga's instructions religiously hehe