It should be pretty easy to check the gauge operation by connecting it to 12v, earth, and a resistance of, for example, 28 ohms or thereabout to earth.
 The high resistance being at the empty end means that if the wiring is high resistance anywhere, the gauge will read empty all the time, but presumably you are using a high impedance meter, which will show the voltage even with several thousand ohms between it and the gauge. Try the voltage at the sender with the sender connected. If it drops to almost zero, this will confirm a high resistance circuit. And are you sure that the sender is properly earthed? 
I'm guessing you have a wiring problem, possibly bad connection at a join or the fuse contacts (although this may operate other things as well, which should also be playing up).
John
				
			 
			
		 
			
				
			
			
				John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
			
			
		 
	
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