I recently built a new bbc for our formula I installed a water pump crossover and thermostat the stat is 160 the water neck has a bypass to the crossover for cooling the exhaust the motor runs great but I cant get any water temp I feel the oil filter and its hot to the touch but the heads are luke warm.Any suggestions?

as long as you are getting oil temp to around 200 deg,dont worry,my engines in both of my boats have water temp around 125,and oil temp 190 to 210,imo,you are good if this is the case.

How is it possible to have water temp lower then your thermostat setting? How can it circulate

I have pretty much the same thing, my engines runs 130 and oil 190 with a 160 thermostat. There must be enough leakage past the thermostat to get enough flow to keep the engine that cool. Remember too that we are using lake water for cooling so even a small amount of very cool water or in my case extremely cold is all that is necessary.