temp gauge isnt working.

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What aftermarket gauges do you have? That can change a lot of things. You might also have a second temp sender on the block somewhere if you have an aftermarket temp gauge, so you might need to look for that and make sure it's hooked up. Mine's a Chevy 350 so I can't tell you where to look but I'm also running the stock and aftermarket temp gauges with 2 senders.
 
Can you just figure out where the cut it and connect the two wires back together? It couldn't be to far considering it comes in to the firewall only a foot or so away from the cluster.
 
Your panel looks just like mine, those studs are just studs don't mess with them. Take a picture of your temp sender and let us have a look. You need a wiring diagram and I just posted this yesterday, but I'll post it up again. Also, my temp gauge just needed the sender replaced, but you need to check and see if grounding it moves the needle. Also, make sure to disconnect the battery before messing with the cluster, you'll short your amnmeter and cause some damage.
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Wait a minute! Aftermarket gauges can be your friend. I use a set as a redundancy measure and because they are calibrated with actual numerical markings. Plus the PO already chopped the dash for them and it was easier to fix them than fix the dash.

I forgot to say to trace the yellow wire starting at the cluster since you said it's still there. It should lead to the sender but maybe it went bad and was bypassed by the one you found. The original question still stands then...where does your loose non-factory sender wire connect at the gauge? On one of the studs?

Also, with the cluster connector still connected and the battery hooked back up, you can (*) use a piece of wire jammed into the connector at the yellow wire connection and short the other end to ground to test the gauge. Aha! Shorting the sender end before didn't do anything at the gauge because it isn't hooked up there. See where I'm going? The yellow wire in the harness might have gone bad and been bypassed but we don't know where along the wire it's bad. We don't even know if the ring connector on the loose wire was ever hooked up to anything. If this (*) test works, you can try to splice the loose wire a few inches from the cluster connector or remove the original yellow wire from the cluster and replace with the loose one.
 

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