The thermal regulator is behind a screw off cap between the in/out pipes in the heaters header. With the pump off, unscrew the cap and pull the regulator out. Note, if the regulator does not come out easily and feels like it hung up on something, then the bypass is broken and hanging in the way. If it comes out with no issues I'm sure you find it's all gunked up. Then use you fingers and stick them in the opening and feel up around towards the top middle and you should feel a round button like item, that's the bypass. If you feel it and it seems to be solid, then you are good with that.
To test the thermal regulator Put it in hot water (130 to 140 F) to see if it opens.
The thermal regulator is sensitive to water chemistry and can get erosion.