I know that some oil temperature gauges read really high from the factory and the accepted fix is to put in an in-line resistor to reduce the reading.
Apparently a 0.5w 15 ohm resistor was the one used.
The instructions below are from our friend Dieter's site:-
MGF MY1999 Oil Temperature Indication Failure
Affected cars: MGF Modelyear 99 (the first of the so called MY2000) approximate VIN range 511000 ... 52????, not official approved !!
Failure: Indicator for the oil temperature raises up to 170°C at high speed.
Reason: The dual Oil temperature Sensor does not relate to the specifications
Action:
Pull off the 13 position multiplug No. C160. This plug is located in the engine bay left of the main relay.
Cut the brown-blue wire at app. 60mm apart from the plug
Solder a resistor of 15 Ohm O,5Watt between this open connection and seal it with shrink tube.
Wanting to get a more accurate gauge rather than just reduce the reading, I bought a selection of resistors from 10 to 50 ohm at my local Maplins and prepared to experiment. They only stock 0.6w resistors but that difference is not important in this case.
I visited my friendly MOT garage and established that when the car gauge read 130 the oil was actually nearer 95.
So then it was a question of introducing the various resistors until the reading was correct. In the end it was 45ohms resistor that did the job.
Also I reasoned that it was substantially easier to introduce the resistors at the gauge end of the feed line rather than the quoted above position. So I made up a small adapter to go between the plug and the gauge. I soldered a male and female spade connector to each end of the resistor covered it with shrink tube and Robert's your father's brother.
Then it's just a case of popping out the centre vent and inserting my adapter into the line.