Here's an explanation from someone better able to describe the parts than I. I found this information on a previous tachometer thread from RSH. You can replace rubberbands where he uses cardboard if you think my method sounds better.... It worked better for me!

"The cylinder on the fender well is the diagnostic socket, sometimes referred to as the tach amp, there is a lead that runs from it to the tach sensor just as you observed. There are some tricks you can try to get the tach to operate. 1. Sometimes an engine thats almost twenty years old has alot of grease and grime and in the case of the tach sensor it can get really dirty at its pickup point and even though its pickup is magnetic I think it helps if the sensor is clean. 2. Unscrew the cap on the tach amp and look at the pins and mating sockets for corrosion, you can clean if necessary. 3. Separate the cap from the male portion of the pin assy, it will take a little pulling but it will seperate, on the back side of the male pin assy is a potting material (silicon rubber) check to see if it is intact and not allowing the pins to float excessively. 4. Cut out a piece of standard 1/8" thick cardboard in a circular shape the same diameter as the inside of the tach amp cap and position it inside the cap. 5. Install the male pin assy back into the cap. 6. Screw the male pin assy with cap to the female socketed base. 7. Start the car, the tach should now work, you may have to make adjustments as to how tight the cap is screwed on so that the cap with cardboard spacer applies the correct amount of pressure on the pins for good contact."

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David Dodge
1982 300D Turbo Mercedes
1948 Willys Jeepster