bn11954,
Sorry. I didn't mean to ignore this, but life and business got in the way, as sometimes they do.
It seems what my office manager actually did was to calibrate his gauge, not cure the "swings", from which many of these gauges suffer. However, I just spoke to him about the phenomenon, and what he says has the ring of truth to it, for I have also been subject to this problem, mostly in MGAs.
Now, the MGA uses a gauge which employs balancing two electromagnets in opposition to each other to suspend the needle counterweight between them. More fuel, which moves the float and therefore the resistor wiper in one direction, results in one magnet exerting more force and moving the needle in the FULL direction. Less fuel has the opposite effect.
What Cliff says is that the only thing likely to cause this is a connection which is tenuous at best, and keeps making and breaking. This is most likely in the sender, but could be anywhere in the electrical "chain" of the system. Does your needle bounce when standing still? Probably not, though it's concievable that fuel, which continues to slosh about may be the cause. It's more likely that this happens when you're driving, with small bumps bringing about the connected-disconnected condition. Let me know how this sounds to you. Others?
Motorbill
From Lola to Land Rover, If it's British and has wheels, it's likely I've bloodied me knuckles thereupon