I have an 89 GT where the oil pressure varies from good pressure to no pressure at all while driving. The engine has been completely rebuilt with all new internal parts within the last 2000 miles. A mechanic checked the oil pressure with his mechanical gauge and the oil pressure readings - both hot and cold -were very good, they are where they should be. A new oil sensor did not improve the situation. My mechanic says the problem is in the wire connecting the señor to the gauge or the gauge itself.
Has anyone else had this problem, and if so, how was it solved? Would just installing a mechanical gauge be better?
It is either a oil pressure gauge or a wiring problem. Since you have already replaced the sender, you get to chase the wiring as a first step. If you aren't good at electrical troubleshooting, this will not be an easy fix. The phrase "my mechanic" tells me that you probably aren't good at mechanical/electrical troubleshooting. These cars are not a good choice for someone who has no mechanical/electrical skills. Due to their age and previous owners efforts, they require lots of work and tinkering.
If you tell me that you can troubleshoot electrical circuits at a high skill level, I can help you find and fix the problem. If you aren't it will become evident very quickly, so don't exaggerate you abilities.