[xlr8or]

Some sending units have a mechanical adjustment so that you can set the proper tank depth. I have seen this before where the depth was set incorrectly and the float was sitting on the bottom of the tank but the readings were as you have described.
To verify if this is the problem pull the sender out and manually move it up and down and watch the guage. If you measure the tank depth and move the unit to that length it should read empty on the guage. If not and you move it farther will it go to empty? If it does you need to adjust the length of the sender to match the tank.

Just my .02

Scott