......I was told that they had similar problems with London Taxis and the only solution that they had found was to run an earth wire from the sender on the tank direct to the battery.....
That makes perfect sense Peter. Given the fuel gauge is essentially a voltmeter working in a very low current circuit, a shared ground return will compromise voltage measured at gauge as total currents vary in the shared leg.
I was first made aware of this phenomena when fitting a smart external alternator regulator which piggy backed the internal one. The fitting instructions just said keep the two black ground wires separate but I later learnt one carried the rotor current and the other was part of the battery voltage sensing circuit carrying virtually no current.
