That's a capacitor, or in car-speak, a condenser. It smooths out the voltage by eliminating the peaks and valleys so the needles on the gauges move slowly and don't jerk around. Without it, for example, your gas gauge might read empty momentarily when you went around a sharp turn.
One more question (for now):
I get that you put a "Y" on the oil sender port and that you added another sender for the water temp. Does the circuitry for the temp senders share any wires? It sounds like they're separate. Same for the oil senders--it doesn't seem like the old circuit and the new one connect anywhere. The black wire that feeds the limiter comes from a splice connection of four or five wires all taped up in the middle of the dash wiring harness. A short might have damaged that wire. As a quick test, you could run a jumper wire from the "BATT" spade connection on the bottom of the fuse block to the center spade of the limiter to see if the gauges will respond.
Good luck
