It's not strange at all. This truck obviously originally didn't have a gauge, just the light on the dash. That's all that small sender does, it's a simple on/off switch. Yes, there will be voltage going thru the gauge wire, the sender sends this signal to ground to control either the light or the gauge.
In the case of the small sender, when there is little or no pressure, the switch is closed and the oilcan light on the dash turns on to warn you. But with the bigger sender, it changes resistance as the oil pressure fluctuates, and the gauge fluctuates accordingly to match it.
The problem is, if you swap the dash cluster to the SR5 gauges and hook the gauge up to the small sender, when you start the engine and the switch closes, too much current goes thru the gauge and it goes POOF. No more gauge.
Sounds like that's what happened here, you get to replace the gauge in the cluster now.
It's likely that the CEL light is on because the knock sensor is disconnected, that's what that green connector is for. Have you jumpered the diagnostic connector to pull the error out of the ECU?
BTW... get the ****py POS Fram filter off your engine NOW. Do not use them, they suck. Get OEM filters or something better, the NAPA Gold is also a decent filter if you don't have a dealershp nearby.