The instrument panel voltage regulator regulates voltage at the panel. However, it does not control the response of the individual remote sensors / transducers / sending units (whatever name you use).
As Cobra Six said, the sending unit that screws into the block is likely a source of your problem. After my car had been sitting for years, I replaced the sending unit with a new replacement as part of the getting it back on the road. My temp never even registered in the middle of the gauge. However, my engine was boiling over and running hot. I dug pulled an old sending unit off of another engine and it read correctly. Then, all I had to do was fix the balancer and the distributor etc to correct the overheating problem.
Doug
