When you touch the wires together you are fooling the gauge into thinking its full.
With your voltmeter, check to make sure you have anywhere from 4.50-5.00 volts on the gauge wire to ground.
If you have correct voltage then your problem is on the ground side, two grounds are used for safety.
If you do not have any power on the gauge wire you have a power problem.
In either case, when you hook up the sending unit it is of high enough resistance it will kill either the ground or power if there is a problem.
I am betting that boat has glass fuses in it, they are notorious for corrosion, you may have a voltage reading until a load is placed on it, the gauge reads because of its low voltage ability even if there is a problem if that makes sense.
If you cant figure it out, PM me and I will give you my cell number and I will walk you through it, its hard for me to convey what I am trying to say in typed words.