Tomorrow I am going to pull my instrument panel on my '82 300SD and run an extra ground wire to see if my temp gauge remains more stable and to see if the tach side of panel will light more consistently for night driving -it often works when moisture is present (rain, car wash etc.) Has anyoone else experienced improved temp gauge operation as a result of improving ground connection? I cleaned battery to ground and engine to ground contacts yesterday with no improvement . . .

Not me, but yes, a lot of people around here have run extra grounds to lesson temp gauge wonkiness. The threads are out there.

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1984 300D, 228k, Light Ivory, Java MB-Tex

Not only that but my fuel gauge became more accurate. The original gauge on my 85 was crazy wonky. My oil meter started leaking so I replaced it with a unit from a 1981 300D.

Now I have the cooler chrome center caps and the gauges are far more accurate than what my older one had.

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-Typos courtesy of my mobile phone.

I would also check the Wire connection at the Temp Sender to make sure it is making good contact and not giggling around.

Not directly realted to your problem but I have also seen crap build up over the tip of the Temp Sensor and cause it to give an inaccurate reading.
I had 2 gas cars where the Idle would remain high too long (supposed to return to normal after Engine is a certain temp) and it turned out to be what I said in the previous sentence. The crap coating was insulating it.

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84 300D, 82 Volvo 244Gl Diesel