Which side of the thermostat did you install the sending unit? Sounds like it's installed after the thermostat, before the radiator. If your motor isn't getting warm enough to open the thermostat, the sending unit won't be submersed in coolant and won't register. Try installing in the block, cylinder head or intake manifold. IMO, I'd opt for a better set of guages than something from a cut rate tool supply company. Summit Racing has several guage kits like you describe for under $50. Just my 2 cents.
