Coolant temp gauge problem

I have grounded the wire to the block and the alternator case since they're close by. I attached a long wire to the connector in the engine bay and ran that into the cab. I can ground that to the dash frame and watch the gauge go up to hot.

I don't have any sealant on the sending unit.

The gauge doesn't have a ground. It only has two posts on it, one is 5V supply the other is the wire that goes to the sending unit. I thought the sending unit supplies ground to make the gauge move.
The cluster MUST be grounded. Part of the circuitry of the IVR must be grounded. I would run an extra wire direct to the cluster. You can find mounting screws near the ground points of the instrument lighting EG. I can't see and am not familiar with what you have, and realize it is different than the cars.

It's also possible in some vehicles that the body is not well grounded to battery NEG, AKA engine block. In the old days, many vehicles, not just Mopars, had poor grounding between cab/ unitbody and the battery NEG.