Did you confirm that disconnecting the sender (with the ignition on) takes the gauge back to C?
Did you ground the wire (with the ignition on) and confirm the gauge goes to H?
Looking at your picture I would say your sending unit is not the correct resistance range for the gauge.
You can look for resistance values for the factory sender in relation to temperature and verify the readings with a DVOM.
Your solution is somewhere in the link below, let us know what part you had to replace.
http://forum.73-87chevytrucks.com/sm...?topic=25339.0