The 5.7’s are made by GM and the basic engine is the same whether it’s marinized by Mercruiser or Volvo. While a bad sender can cause issues I’m not sure I’ve heard of this type of bounce. Try connecting an ohm meter to one with the red lead on the sender and the black lead to a good ground. Then run the engine to see if the ohm reading is steady at a given rpm.
Oil pressure gauges bouncing?
Linear Mode
