Just going through in my mind the way a sending unit works. This thing picks up resistance like an ohm level? If I take the wire directly to a ground the gauge should read full/over full ? This would verify the gauge is working and the issue is something else?

As long as the wire has a good connection and is not naked in an area where it is grounding and the gauge itself works then the sending unit is at fault??

 

The sending unit receives power on one wire; the float (assuming gas tank sending unit here) varies the resistance to ground, thereby allowing more or less current through the circuit, thereby allowing the dash gauge to read at different levels.

Yes, you can pull that wire off the sending unit and ground it, the gauge should then read overfull (this behavior changed in 1987 (I think) when it would then read below empty).

But if you ground/un-ground that wire and have the dash gauge peg out each side as a result, this shows the wiring and gauge are fine and the problem is in the sending unit.

Same principle is used in all the sending units, e.g. oil pressure, water temp - they all vary the resistance to ground.