I have a temp gauge in my '78 camaro that reads at 260 when the water temp is actually 190. I changed the gauge and I changed the sending unit. It did not help. Is the wiring grounding out somwhere or what?

yup that would be a good guess especillay if 260 is the gauge max. start tracing back through your harness an check your gauge it could be bad. good luck

Pull the wire from the sending unit, Gauge will read Maximum or Minimum, Ground the wire, the gauge will read opposite. If this does not happen then the problem lies in the wiring or gauge. If it does work as described then the sending unit is suspect, Did you apply any type of sealant on the sending unit when you installed, It should go in without any. Check for ground straps between the body and engine, I believe that there should be one from the bell housing to body below the drivers firewall.