Usually it is a bad ground. You may want to double check the ground. Don't forget the guage in the dash needs to be grounded also.
I would also check the rest of the wiring. In fact I would bypass the wiring in the car and run new temporary wiring.
I would also try another fuel guage, one that you know works. OR try the components, fuel guage , sending unit,and set up a mock wiring on the bench.
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A.S.D.Zimtok
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