The sending unit is a rheostadt just like a volume control.. The resistance varies which changes the voltage sent to the guage. If you have open readings then the circuit is open during those times pointing to an intermittant rheostadt winding.
EZ to check... With the sending unit out of the tank and grounding wire connected. Have a buddy read the guage as you vary the sending unit. Action should be smooth and consistent, if not then the sending unit is likely damaged..
