The voltage drop should go between the hot lead and the gage. 12 volts may have damaged the gage or sender or both. I built a 6 volt regulator using an IC chip and transistor. It holds a constant 6.8 volts to the gage. A runtz is a resistor, it varys in voltage drop according to the load placed across it. In most cases this does not hurt anything. But I'm not sure how accurate your gas gage would read with one. You might also try checking your ground.
