I don't know about 98 Contours, but on my '95 Duratec, the water pump ("WP") had plastic fins that just fall apart over time. The WP still spins, but with out working fins and now plastic debris circulating, it causes vasilation (which is it spinning so fast that it creates air bubbles in your line.) Air in your coolant system, plus the fact that it's no longer really circulating is bad...very bad. Likely, your pump went first, then the engine overheated, which just sped up the water pump breaking even more.
On the '95 Duratec, one way they are shown to replace the water pump is to drop out the entire engine, which also means dropping the entire drivetrain. I guess there is another way to do it, but I never bothered to check into it.
Oh yeah, I believe the dealer charged me around $400 for the water pump replacement. (I had my own mechanic change out the thermostat first while we were troubleshooting the problem.) As it turns out, when my car overheated, it also broke my thermostat. So they both ended up getting replaced in the end. But the dealer only did the WP.