Alternator Scamp /6

but when driving again (reverse and drive) it spikes again to 40+. It stays like that while throttling. Now today while driving I simply tapped on the gauge itself with my finger and it sparked and the needle fell off.

You likely have a couple of problems. Damage to the harness through the bulkhead connector is usual, and damage at the ammeter

Read this article by MAD

http://www.madelectrical.com/electricaltech/amp-gauges.shtml

Then dig in. I would not fool around. Drop the column, pull the cluster, and inspect, repair, or bypass the ammeter.

Pull the bulkhead connector apart and inspect and repair or bypass it. Again, refer to the MAD article.

Inspect the connector at your ignition switch for heating/ damage.

What year/ model we workin' on? You can download a few years of the factory shop manuals