With an aluminum water pump housing the ground potential could be the problem. Ohm out the difference between the cast iron block to the negative on the battery and, ohm out the resistance to the water pump housing to the negative on the battery. Also you should check the engine to body ground. For the sender to be correct there should be no difference.
As said in an earlier post, the gauge and sender work on resistance and everything is in reference to ground.

Digger73

I live with fear everyday but, sometimes she lets me race!