Temperature sending unit problem.

I will bet the cost of the sender that the problem is NOT the sender.

I ground the temperature sending wire on the alternator and the gauge will jump up to hot but fairly slowly.

This is normal, thermal gauges react slowly

And once I take it off of the ground it falls slowly back down to cold

This is normal thermal gauges react slowly

and then goes below cold and sometimes points below the dash.

This is NOT normal.

When I have it connected to the temperature sending unit it just sits below or at cold.

This is NOT normal if the car is at temperature

I believe it has been stated that the gauge and OE sender worked fine. Then had an issue that the sender did not fix.

If the fuel gauge is functioning correctly that suggests the dash voltage regulator is good.

If no other changes were done to the car between working and not working it is the gauge.

Just my 2 cents.