How are the readings erratic? Maybe there is a loose connection some where.
If there are plug(s), such as a wiring harness, between the sending unit and the gauge there may be corrosion in the plugs.
From the picture it looks as if there is some sort of pipe dope on the threads of the sending unit. Insulating compounds on the sending unit threads will change the apparent resistance of the sending unit.
I've checked on all the connections, but I'd gone back and forth with the pipe dope. The sender worked well last time it was out, but it tends to go from reading correct (or at least close to my IR gun) to way over heating and back. All within seconds.
I'll remove the sender and clean the pipe dope off. I'll reassemble with copper based antiseize.
The bouncy readings sound like a wiring problem. Disconnect the wire at the sending unit and the gauge and run a jumper wire in it's place and see if the temp gauge works correctly.
The sender is a 240-33 ohm variable resistor with 33 ohms on the hot end and 240 at the cold end of the range. The one you have is small and uses a threaded bushing to make up the difference. The current that flows through this to ground is going through 2 layers of pipe dope.
I would be temped to sand that fitting nice and shiny about where the number 62 is, hose clamp a wire on it, connect the wire to ground, and see if that fixes your issue. Another thing after sanding it nice and shiny is to measure between the 62 and ground, you should see 0 ohms.
There are a lot of possible resistance ranges of senders, but by far the most common here is 240-33 ohms for temp, oil, and fuel.
It is of course worthwhile finding out what the gauge was designed for, but I know my engine came with the standard 240-33.
Besides for someone fitting a non-standard sender like the Faria you found or VDO 10-100 ohm stuff, these are the other common issues:
1. It is 33-240, but not the temperature or pressure range you think it is. There are 140-320 degree sensors out there intended for oil temperature and oil pressure senders come in a few ranges too.
2. It is a sender intended for dual gauges with only one gauge on it or vice versa.
3. The ground through the engine and thread goop is poor.
Here is a list of fuel sender ranges, with the 240-33 being most common on boats.
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