The sensor is basically a potentiometer that is varied as the motor tilts. I'm not sure which way the reading goes as you tilt, but all you're doing is varying the resistance (or perhaps voltage, if they've tied one end to power) that the indicator sees.
Turn everything off, place an ohmmeter on the pins at the back of the indicator, and manually move the sensor. You should see the reading change on the meter. If it doesn't, see if you can do the same thing at the connector for the sensor. If that's good and the reading at the gauge is not, then your problem will be in the wiring.
If you're getting a change at the gauge, then investigate whether you're supposed to have power to the sensor, and go from there.