I think the way it works is the ignition sends 12v to the gauge in the dash, and the wire through the flat cable and to the tank is the ground wire for the gage. The variable resistor on the sending unit changes the resistance between the wire coming from the gage and the ground wire that comes off the sending unit to the body, therefore varying the resistance on the ground wire to the gage to make it read the appropriate value.
First thing I would do is remove the sending unit and move it by hand and see if it works properly. My experience is that new sending units do not always have the float arm bent properly. If so, it may be hitting the top of the tank before it moves the variable resistor all the way to the full position.