Grounding the instrument voltage regulator

Are you not supposed to ground the instrument voltage limiter? I did a bunch of reading here before doing so, but I may have fried it.

My problem is the fuel gauge doesn't work. While re doing the car (1970 Dart, standard cluster) I installed a new sending unit, new line, new ground strap at tank, and new voltage regulator. The gauge still didn't work. I grounded the sending wire at the tank and got someone to watch the gauge with the key on, it didn't work. So I pulled the cluster out and replaced the fuel gauge with another I had. I then grounded the voltage regulator, because I had read here it needs to be properly grounded. I turned the key on, and the gauge went to a 1/4 tank, then I saw/smelled smoke from something melting. I immediately shut the key off.

My question is, did I fry the voltage regulator? I didn't kill any fuses. Or did I most likely kill the gas gauge?

Any input is appreciated.