Ray, The diagram says "oil pressure switch", although from a third party manual that covers the engine ranges from 16,000 to 2,000cc. One wire. I bought a new switch and put a multimeter on. There is continuity from switch terminal to switch body.
So from what you say, if the circuit is open, like disconnecting an in-line switch, the light should go out. It never. Good point about the PTFE tape.
With the switch in your hand, if there is continuity from the terminal to the body with no pressure, then oil pressure would open the circuit and extinguish the oil light.
Disconnecting the wire opens the circuit so the light should go out.
Sender in my car only has one wire. Looks like he has a wiring fault to trace.
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