Has this gauge always acted the same or is this something new. These gauges are notoriously inaccurate mostly due to the angle of the hull and the height of the sender off of the tank bottom. Depending on hull angle as when getting on plane to flat at sea, the number of bars displayed can differ by 3, sometimes 4 bars. So 2 bars at rest could read 5 or 6 bars getting on plane.
In addition, a one bar display has a different meaning that one flashing bar. I can't say what no bars mean since I have never seen that in 15 years. My tank is the same capacity as yours. My questions is " How did you determine that you had 40 gallons in the tank?
Note also that if you have extra passengers on deck and perhaps sitting aft, you will read a higher level that you really have. If you have passengers sitting forward, you will read less gas that you really have.