ljPlum,
Before start tearing into it, let's check a few things:
What is the name and model on your FEL valve?
Is the gauge connected to the pressure line from the pump to the FEL valve?
You said that the bucket is working so now can do some testing:
Set tractor RPM at about 1200.
Now curl the bucket till it stops. When it can move no further (mechanically), the relief valve should open. This should be at 2000psi. If it is not, adjust relief valve so that it is (2000psi should be a safe setting for testing).
Now open the bucket till it stops. Relief valve should open at 2000psi.
Now press the lever to raise the FEL. Tell us specifically what happens and what the gauge shows.