Did you use a new genuine Toyota thermostat? I have had trouble with aftermarket thermostats on the 3S doing weird things like not opening properly or always open etc. The genuine ones are perfect and worth the extra $$$.

Yea previously had a genuine one going to replace it with another genuine and new gasket. Also going to test it in boiling water to ensure its working properly before I drop coolant and install it again. 

The jiggle pin needs to be pointed straight up also which is found on the OEM thermostats (I've seen aftermarket without them). This lets the air move through the system and out. 
 
Disregard if you already knew this :) 

Make sure your heater is on/open as well. 
Need have a bleed point like was stated above, that front hose is to high. I added a deep drip tray under the front the car as well so the coolant is  not going over the floor, can reuse it . To double check I have use a pump pressure system put 60 to 80 psi to the cooling system. Should do this to check for leaks and weak points. I do this on all rebuilds or every 100,000kms

Many of us have been through this, once you work it out it will all seem simple. Interesting the fluid level in the temp hose from radiator is level with the fill up point, would suggest the air has been expelled from the radiator. Do you remove the pipe to radiator first before removing the funnel? That way you wont have air sucked back in through the radiator.
 
Definitely handy to have the wife and mistress help out as many hands needed by the sounds of things!
 
Would be interested in hearing how the test goes with the thermostat, Mike in SA had a brand new one from Toyota not work so it does happen. If thermostat passes the test maybe temporarily run the system without the thermostat to see if the water is going full circle.
 
If Doug (falcon) is reading this he would ask - what brand water pump do you have? The Aisin/OEM brand is the way to go, hopefully you have that if it can be identified.

Matts_SW20
Yea previously had a genuine one going to replace it with another genuine and new gasket. Also going to test it in boiling water to ensure its working properly before I drop coolant and install it again. 

Genuine is the only way to go in my books, in saying that, as mentioned I have had a genuine toyota unit fail me with only 1000kms put on it. Don't ever disregard the part just because it is new or new / genuine.

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I know it's no help to you but for reference, I've successfully dumped & re-filled my coolant twice in the last two years - never have I once used the tap on the radiator (due to mine having a leak so I don't bother). All I've ever done is jacked up the rear, opened the heater core tap with the heater on full heat / full fan speed and just let it run for 30 minutes while watching the temp. gauge like a hawk

It could be a dead lead but maybe the new thermostat is no good. If the radiator is dead cold, that's a perfect sign that no "heated" coolant isn't making it out of the engine block - I have limited knowledge but the only thing that could possibly block it is the thermostat right?

Thanks for the responses guys to answer questions:
- Yep I've always put the jiggle pin perfectly in line with the top marking on the thermostat housing. 
- I've always got the heater tap open as a bleed point when bleeding, not sure what you mean when the hose it too high? It's meant to be higher than the fill point at the back.
- My process for radiator hose is to have my partner fill at the back while I quickly remove hose, plug with finger, put plug back on. It can be problematic if I don't get it first go and spill too much coolant everywhere. I think I'm going to take Friday off and go get a set up like robk where I can have a hose permanently under the garnish that can be called upon for bleeding. 
- My water pump has been replaced but my mechanic purchased the product, I am unsure if it is OEM. 
 
I took the thermostat out today and tested it in a pot of boiling water, it works fine so I didn't bother replacing and put it back together. I also bought some fittings but in hindsight I should have got the full set up as mentioned above:

 
All evidence points to the thermostat now as I still can't feel hot water in the radiator but I've confirmed that it's working fine. Going to give it another crack at bleeding then calling it quits and chucking it at a mechanic. 

Is it an OEM thermostat? The one you have tested in the water?

Yep 110% Toyota. What is concerning is my sensor for the gauge is not, I'll only replace that when I can feel coolant in the radiator though.