Oil pressure gauge pegged

That won't CAUSE a problem but it could be indicating a stuck or plugged pressure relief valve in the oil pump. Replace the sending unit with a temporary mechanical oil pressure gauge to see what you actually have for pressure. You could have the wrong sending unit too. Was the old one leaking?

It was showing very low pressure reading. Quite often dipping down into the red for a while. For example, when driving at highway speed in high gear.

So it would appear the high reading just started with the new sending unit. That would suggest it's the wrong one or it is defective. I just recently figured out mine was stuck reading 3/4 scale for I don't know how many years. I noticed it didn't budge when when I stopped the engine and turned the ignition switch back on.

Your gauge should go down to low if you unplug the sending unit. If it does not, that wire is grounding out.

Much appreciated advice. I will try in the morning.