Like rubjohnny says checking the earth lead is a good idea.
Also when you find the wire to the temp sender disconnect it and go turn the igniton on, the dial shouldn't move, if it does then you know that the fault is in the wiring to the sender.
The normal test to check that a sender is faulty is to remove the lead and earth it to the engine which makes the dial go fully over to the max. The sender resisits current flow to earth so when they go wrong the dial doesnt normally move at all or very little.
Seeing as your dial is doing this already then it must be the current feed for the sender is earthing out somewhere along the line. trace the wire back from the sender and look for any damage to it.
See if that helps geezer.
