When a fuel gauge behaves as you described (pegs to full when the ignition switch is on), you most likely have a good gauge but you do not have a good gauge to sender/ground circuit.
Three possibilities:
1. broken (or, no) lead between gauge and sender.
2. bad sender unit
3. sender body is not grounded
The easiest way to test/diagnose this is to attach a lead-wire from the sender side of the gauge and attach that lead to a god/clean ground. The gauge should drop to zero.
Then run a long lead from the sender side of the gauge to the input side of the sender in the fuel tank. If the gauge does not read properly, then run a ground lead from an attachment bolt on the sender/tank to a good ground. If this does not give a correct reading, then remove the sender and "bench test" it.
Last edited by tclederman; 02/13/2013 7:39 AM. Reason: I was composing my post while Roy was posting his
