the raw water pump is ALWAYS cool BTW, it has fresh sea water in it!!!
the gauge is just a resistance meter and the sender is just a variable resistance. anything that causes the gauge to see a changing resistance will cause it to move the needle. I'm with Stu, start at the engine and check for the sender being firmly attached to the motor,, the wire being firmly attached to the sender, breaks in the wire insulation that would ground it, quick connectors that are corroded (you can safely neuter these out of your circuit unless you practice repeated engine swops). that last item can be a real PITA as if it is located in the engine compartment and gets hot the corrosion will swell and things start out fine, then go crazy, then settle down as everything comes up to temp, the connection can look fine to the eye but corrosion between the quick connect bayonet and the wire (hidden behind the quick connect plastic) can be the problem child. Really hard to diagnose those BTW. See above for the ultimate solution
