Thanks for the tip Billy N.

I did more testing and tried grounding both the gauge (brass dot between "hot" and "sender" contacts) as well as the sender but nothing changed. I did find that that if I ground the gauges "wound coil" near the "sender unit" connector (not at the "hot-side coil")... the gauge works correctly and follows the sender units E /F instructions.

I also found that the wound "thing" on the lower back of the gauge gets very warm. Is this a heat sink?

Will the gauge work when installed without shorting the coil?

Why does the coil need shorting to ground?

Is there something wrong with the coil? HELP!!!

These conditions are the same on both the original gauge as well as the replacement gauge.