My guesses:

1. You might have a bad ground - run a ground wire from a post/nut on the sender to a clean ground on the frame.

2. You might have a sender with an ohm rating that does not match the ohm rating expected by your gauge.

3. Or, both of the above.

http://www.tanksinc.com/index.cfm/page/ptype=results/category_id=159/mode=cat/cat159.htm