A few troubleshooting points in addition to my previous post, and a simplified operating description.
The gage operates by applying 24 volt power to one side of the gage, then taking this power from the other gage terminal (S) to the sender. The sender is a variable resistor that then sends the power to ground. High resistance registers as low fuel, low resistance as high level.
Does your tank show full, or peg on the full side? If it pegs "full", you most likely have a short in the sender lead, to the chassis ground, somewhere in the generator.
A quick way to verify this is to turn the master switch to run (but don't start).
First. If the gage pegs, remove the sender wire (S) from the gage. If the gage drops to empty, your gage is good. Reconnect the wire.
Second. Carefully remove the sender wire from the Sender and see if the gage is still pegged. If it is still pegged, you have a short somewhere. In other words, something is taking the power to ground, before it gets to the sender, giving you a fake Full signal. (Some gages also can be damaged if they get full power for from a short for too long. Full is normally 33 ohms in the sender. This could be why your original gage was defective).
Put some tape over the disconnected lead at the sender, and with the unit in the run position (but not running), start (gently) tugging and wiggling the sender wire between the sender and gage. When your gage drops to empty, then you are close to the short.
Keep us posted, and we will help you get this problem solved!