Pretty sure OP had the sensor calibration in the ecm wrong.
I'm having a similar issue with my coolant temp sensor currently and I'm really thinking it's a calibration issue.
So far I've swapped the sensor and mechanical gauge and the engine harness. Nothing has changed. ECM always shows temperature at 12 degrees below actual.
I also found this online that explains a bit.
Going from a DDEC III to DDEC IV ECM? Do Yourself A Favor And Verify Your Temperature Sensor Readings - Diesel Control - Magazine - Movin' Out