How exactly does this circuit work?

On my 1984 190 D there is no low oil warning light. I was going to rig one up since I put the engine from a 1987 in the car and the sensor is there.

I figured that what happens is that 12v go to the sensor and if the oil is low it would ground out and light up the light. When when I hooked it up that way the light was always on - with the right amount of oil in the system.
(engine running or not - the light was always on)

Is there some circuit in the gauge cluster that controls this light. That seems odd to me, but it could be possible.