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I have a 2001 6 spd CTD and my oil pressure gauge isn't working. I can turn the key on and wait a little while and it'll go to 70psi without the engine running.
They will tell you you need an ECM/PCM update that will render your gauge worthless. Do a search on this and you will have lots of reading. I had the reflash done to my first 01.
Buy the sender from Cummins, ~$55 if I remember right. After they reflashed mine you could hang a sender in mid air and get 40 PSI on the dash.
Sounds like the sending unit. I had the same problem a few months ago. Do a search for the correct part number and get it from Cummins. One part number requires a PCM reflash one doesn't. Get the one that doesn't need a reflash.