Just wanted to give an update. I fixed the main power wire splice issue, replaced the regulator, disconnected the new fuel gauge, and turned things on to find the smoking had stopped. I reconnected the gauge and the smoke was back, so now I was getting really confused. I decided to remove the new regulator and check the output voltage by connecting it directly to the battery, I got 12v, so the new one is bad. I then grabbed the old one I had originally thought was bad, and it seemed to be working when hooked to the battery.
While I was doing all this testing it dawned on me that my cluster wasn't grounded very well since it was just hanging there. I put a temporary ground on it, plugged in the old regulator, connected the gas gauge and all is good, the new LEDs even work! Is it possible the regulators won't limit the voltage if not grounded, I believe it was sending a full 12 volts to the gas gauge and that was causing the smoke. It just got real confusing with all the variables, loose main power feed, bad new regulator, etc.... Thanks everyone for all the feedback. On to the next item.