When I got my 79 240D the sending unit was so full of crap it would not work at all. I removed it and carefully cleaned inside and out. Replaced and it works like a charm. The bottom plate of the sending unit has grooves and small holes. If these plug up with junk, I would not trust any reading I got from the gauge.

However, if you could only put in 16.4 gallons then something does not add up. The total capacity of the fuel tank should be 21.1 gal. if the 124 is the same as a 123. 3 of those are reserve. If you were out of fuel, you should have been able to put a lot more than 16.4 gallons.

Perhaps you have contamination(an algae or water issue) in the tank as well. How do the fuel filters look when you change them? Have you ever run a fuel system cleaner? Could your in tank strainer be plugging up when the level is low?

As far as two pickups issue. Are you saying you indy told you there are two fuel outlets from your tank? I know my 240D has only one but it is several years older and a 123, isn't yours a 124?

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79 240D (no name yet) 203K Miles Maple Yellow
98 2500 4x4 HD Dodge 24 Valve Cummins TD
83 Chevy Van (Dead-Trans. shot)