I have the same problem with the oil pressure gauge on my diesel truck. I have a 200psi oil pressure gauge on the transmission.
I plumbed it with an4 braided line. The pressure usually is around 100psi with the engine revving and 130 on the highway.
But the gauge is very erratic. I called auto meter about the problem and they gave me a part number for a restrictor which really is a nitrous jet to dampen the gauge. It helped a great deal but was still not totally steady. It was explained to me that the reason most pressure gauges are supplied with a 1/8 line is to dampen and protect the gauge. As the other poster has said the problem is too much volume, but as I read on one of David Rehers articles those larger lines let you see exactly what your pressure really is doing.
