Dean:
With the car cold and ignition turned on but not running, the gauge should register at the bottom of the scale.
Disconnect the lead at the temp sensor and connect a standard 12V test light between the wire and a good ground (earth).
The light should glow dimly and the gauge should move. It won't go to full scale because the light adds some resistance.
If you get glow but no change in the gauge, the gauge is probably bad.
The temp sensor gets it's ground from the engine block which gets it's ground from the braid between the chassis front crossmember to the cylinder head. The cross member gets it's ground throught the contact and bolts with the longerons which is connected to the ground wire from the battery.
If you don't get glow, then the gauge could be bad or the voltage regulator could be bad OR your ground (earth) might be poor.
Choose a different grounding point before testing anything else. If necessary, make a long wire that you can clip to the negative post on the battery and reaches the engine bay. That will be a trusted ground connection for any electrical tests you need to perform.
The voltage regulator also provides power to the fuel level gauge, so if the fuel gauge is working, the voltage regulator is probably good so you should check the connections at the gauge.
If the test light glows and the gauge goes up, then the sensor is suspect, but the ground to the sensor might be bad too. This could be the connection between the engine and the chassis. See
viewtopic.php?f=37&t=21968#p276875 for the grounding points and braids.
Brass sensors need a good, glean grounding bond to the housing they are being threaded into. Sensors should NEVER be sealed with teflon tape or thread dope as it will prevent a good ground.
Sensors with tapered threads are tapered so the more you tighten, the tighter the seal between the sender and the housing thus preventing leaks.
Non-tapered sensors use a crush washer to keep things from leaking
On other earlier British cars that used Smiths gauges, the test light would actually blink as they used a bi-metal strip to open and close the connection (like an old mechanical directional flasher) when the power exceeded the 8 to 9 volt requirement.
Modern cars use transistor type voltage regulators that are usually very accurate but can't handle any kind of serious load as they overheat and fail. The voltage regulator used in the M100 is a standard electronic chip that can be purchased from any electronic shop or seller. Radio Shack probably has them too.