The instruction sheet from mid fifty that came with mine a year ago said to check the float as they had some that wouldn't float in gasoline !!! Dean

 

Yes. The floats are not hollow brass. The are, I think, solid neoprene.

 

Like stated by the OP it works outside the tank but not when mounted. So my first though would be that when it gets screwed down, and grounds to the tank, it prevents it from working. Part of my diagnosing would be to install it in the tank without screwing it down and see if it works then. If it works then I would consider using plastic screws and isolating from grounding on the tank. It can't hurt in trying to isolate the problem. All this might be all for naught it he has a sunken float.