Coolant Temp Gauge - What makes it work?

[BigBlue86K30]

So I have had an issue with my factory temp gauge for the past 2 or so years now. I originally thought it was my old tired 454 (that was pretty tired and worn out) just getting old and time to be replaced.

So this spring I dropped in a new ZZ454 crate engine, new aluminum radiator, all new hoses, new clutch fan, new belts, new water pump came with the engine, new temp sending unit, new 160 thermostat, new radiator cap and of course all new 50/50 green coolant. I also used a SnapOn coolant tool when we filled the system to ensure that all the air was out of the system and coolant was properly filled.

So on my first test drive, I noticed that the temp gauge would fluctuate between the first hash mark between the 100 and 210 marks, seemed normal. Then on another drive later on, the gauge started staying around 210 and a tiny bit above. Now when I stop at lights, the gauge start climbing over 210 and has gotten as high as the mark between 210 and the 260 mark. I immediately shut it down when it got to that point. Again, double checked everything and nothing is visibly wrong. Radiator is totally full, no air pockets that I can find, all parts are new. So I again let it idle and get hotter than normal on the gauge I checked the radiator hoses with an laser style temperature gun. Just as I suspected, even when the gauge is reading that it is getting hot, the top (hot) radiator hose is only about 180 degrees, the bottom hose coming out of the radiator is about 140.

I am thinking I have a bad gauge. I cant figure it is anything else. Anyone else have any ideas? I did note that when I got a new temp sending unit at autozone, the counter parts guy asked if I wanted the smaller or larger one. The sending unit in my old 454 block was the larger one. Is there a difference? Anyone know what ohms the gauge is supposed to take to show a reading? I am curious as to what ohms would show 100, 210 and 260 on the gauge, if I knew that I could use my test tool to check the gauge.