I feel like I made a similar comment on a thread elsewhere about Dexsludge but here goes:
If you've got the sludge, yank the thermostat housing and see if it's sludged in the block, too. If it is, you have to nuke the entire site from orbit, since it's the only way to be sure.
1) Replace the coolant recovery bottle with a new one. In my experience, it's cheap enough to replace it rather than attempt to salvage, if it's sludged.
2) You can try flushing the radiator, but mine was bad enough that I had to replace it - no amount of flushes came close to getting it all out. Good chance for me to upgrade from the stock 3/4" radiator, anyway. Even after what had to be a dozen flushes over the course of three months, you can still see the Dexcool goodness oozing out when I pulled the rad:
3) As far as the block goes, pull the thermostat housing, stick a hose down there, pull the bottom hose out and point it towards the ground (or a bucket), and flush like hell. I recommend turning the hose on, turning the heater on to flush the heater core out, and then knock out a couple chapters from your favorite book while it flushes. Or get a burger. You'll never get 100% of the sludge out, but dexcool doesn't eat iron, so the block is safe.
4) Refill with a gallon of conventional green coolant, add water to top if off, and never look back. Just to be sure I'd do another flush in the spring to ensure you get as much of the sludge out as possible. You'll never get it all out, though - but it likes to collect near the radiator cap where you can just clean it off.
