Your temperature gauge indicates overheating but water and oil levels are fine and heater works what is wrong?

If you are absolutely sure you do not have air trapped in your cooling system then you may have a defective gauge if you are getting heat through your heater. Usually I would say you have a coolant flow problem with either a stuck thermostat or a bad water pump but if you have heat from your heater, then you must have circulating coolant in your system. I would check the gauge or the sensor.