Jay,
Thanks, I'll try extending the wires out and checking it that way. I probably should have figured all this out before taking the engine apart, but I wasn't sure what I'd find when I got it apart, so I didn't want to put too much effort into it.

Jakebs,
On mine there are 2 sensors, one for the guage and one for the light. Without the book in front of me I don't remember which is which. One is right above the oil filter, and the other is behind that, in the area below the starter. Your '85 might have a different engine than my '86 though. I've got the 2.3. I think it's fairly common for the wires to get knocked loose from the sensors, but in my case it isn't that simple.
I won't be putting things back together until a week from tomorrow because I'm doing the work 1.5 hours away from where I live. I'll post back what I find though.

Oh, I found out AutoZone has the sensor for $38, so it isn't as pricey as I thought.