oldkoot,
Great troubleshooting. My only comment would be, have you checked the gauge 'only' by turning the key ON and grounding, then removing the sending unit wire at the tank. With key ON and wire grounded to a known good ground, the gauge should swing to EMPTY. Pulling the wire from ground should bring the gauge to FULL.
Your voltage reading indicates you haven't opted for a voltage reducer before the fuel gauge, or you have purchased a gauge advertised as 12 volt compatible. The gauge itself must be grounded well in the gauge cluster. Fiddle around some more and see what develops.
Stuart
