you may have the wrong resistance sender - the proper sender for a 66 283 should be available from NAPA or similar places, but the GMC gauge may be different than the Chevs, and I only find all 6cyl's listed for 60-66's, so maybe you should try a sender from a 230 or 250 if it'll fit - otherwise it has to be in the wiring someplace
edit - just had a thought - if you have the sender wire in the "stock" clips along the valve cover, make sure you didn't damage the plastic coating enuff that it's shorting as it heats up - the temp circuit all depends on resistance to ground
Bill