I had the very same problem with my 240D, assumed that the sending unit was the problem I asked the mechanic to replace it, he pulled one from another old car and replaced with mine to see what happens, well the needle on the gauge kept acting, he then pulled an old gauge from a dead 240D and replaced with my gage, that took care of it, I had a bad gauge.

Thanks,
Vahe


1977 240D +/-350K