The coolant temperature is the better indicator of general engine temperature as the coolant temperature changes and fluctuates more rapidly in response to changing engines operating conditions. Oil takes longer to warm up and cool down, so although useful, oil temperature is a less accurate real time measure of overall engine temperature.

Generally speaking the ideal operating temperature of engine oil should be 10-15C above that of the normal coolant operating temperature. Most water-cooled engine's run coolant temperatures around the 80-90C mark, so you'd expect a good operating temperature for the oil to be around the 95-105C mark. The oil temperature needs to be around or slightly above the boiling point of water to ensure that acidic condensates from combustion are burnt off and evaporated.

FYI - The XT's thermostat is fully open at 85C, so roughly speaking, you'd expect the average oil temperature at that point to be around the 100C mark in normal operation (although I have to confess I've never measured it). But bear in mind, oil (unlike coolant) temperature varies greatly across the engine when its at full working temperature; it can be as high as 160C at the oil control ring, but as low as maybe 50/60C in the oil tank and all temperatures in between at the sump, gearbox, clutch, top end, crank shaft and oil pump.

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