From what I could find out by reading, and reading between the lines: If the thermistor is bad, the fuel gauge won't work at all, just flashes the one bar. When the upper tank gets low, the fuel gauge should show one bar- the next indication is the flashing bar, indicating one gallon or so left.
Apparently, the "arm" on the fuel level sensor is very fragile-even a hard stream of gas is enough to bend it, causing it to read high. SO, it reads 3 bars, although the upper tank is empty, until the (dry) thermistor shuts the display off, and flashes.
The sensor is accessed under the tank, and according to one source, can be removed with the tank on, but it's tough. Not an overly expensive part, and at least one poster cured his bad sensor by cleaning the contacts with a pencil eraser. Probably a good time to replace the big tube going from tank to tank anyway.