[Rick Parker]

The Stewart Warner sending unit is just a wire arm with a float on it that moves up and down rapidly with the level of the fuel. As Ron61 suggested, baffles within the tank or some other means of "dampening" the movement of the arm (fuel level) will reduce the gauge fluctuation. For your particular application perhaps a different design sending unit might be advantageous.
Quite some time ago while doing some work on my own tank I realized whoever installed it had put it in upside down and the cutouts in the sheetmetal baffles within the tank were at the top, instead of the bottom to allow transfer of fuel from side to side. I inverted the tank, welded the original opening; and then replumbed it.