Fuel sender 101
The average old school fuel sender is a potentiometer (variable resistor) which is referenced (connected)to the ground of the vehicle. Now they vary in resistance but are usually somewhere between 80 and 120 Ohms full scale. The FJ manual I have declares that the sender has 120 Ohms.
The sender will show, when measured with a multimeter on the ohms scale, near 0 ohms when the tank is full and 80 to 120 ohms when it is empty.
According to the FJ chassis manual 40 series sender, disconnected from the gauge, will give the following readings;
Float Position Resistance
Full 17 Ohms +/-2.1
Half 40 Ohms +/- 4.5
Empty 120 Ohms+/- 6.5
If you are measuring the sender with the gauge connected then you are measuring, the sender and the gauge with whatever is connected to the high side of the gauge(most likely temp gauge) back down through its sender to ground again. Which will/may give you a weird reading.
Now you may have a faulty gauge or that the voltage regulator of the instrument cluster is faulty. The quick way, is to see if the fuel gauge will go to full scale. Disconnect the wire to that gauge from the sender, and connect that wire to ground. Turn the ignition on, the fuel gauge should swing all the way past the full mark. If it stops at the 1/8th mark then that's where the problem is.
Hope that helps
Cheers
Perry