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Sender is bad. It could be the sender lead has grounded to the chassis/body though. Do as Manny suggests and unplug the wire see what the gauge does (should zero unless the wire is bad). Sender can be checked with an ohm meter, good sender will show open when the engine is off a bad sender will show continuity. New senders run about $65 or so.
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Mike Tangas
'73 280SEL 4.5 (9/72)- RIP 
Only 8,173 units built from 5/71 thru 11/72
'02 CLK320 Cabriolet - wifey's mid-life crisis
2012 VW Jetta Sportwagon TDI...at least its a diesel
Non illegitemae carborundum.
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