After rethinking :dammit: I realized that my problem was simple...You adjust the brightness/dimmness with the controler not the car's dimmer :withstupi.
The Defi then the dimming is controled thru the controler. In other words you can't adjust the dimming of the gauge with the car's dimmer. What u need to do is take the wire(the one that senses the lights on) and connect it to the red/black wire for the headlight squirter harness. This is the blue harness that doesn't go to anything under the shifter console cover. If you don't want to use this then use any powerwire, and only the power wire, to that is controled by the light switch. If you have the wire going to the ashtray light you are allowing the signal to go to ground and thereby pulsing...I've tested this and everything is working just perfectly!!
Just thought I should post the this update!


Marshall

Just for verification:

A few years ago, I took a look under the hood of my "Defi Link Control Unit I" to find that the dimmer connection has active circuitry. It doesn't pass the PWM signal directly through to the gauges. The car's PWM dimmer has to control the lights directly to work. Consider yourself lucky; the "version 1" controller doesn't even have dimming capabilities. :doh:

My D series gauges work fine with the stock wiring... Well I didn't hook any transisters up or anything.. just IGN, 12v, ground and illum wires..

I take this back. Everything works execpt the dimmer. I just checked for you... but personally have other things to fix before worrying about my gauges not dimming. ;) So I guess you would need a resister as well to get the dimmer functions working correctly. Makes sense since its an LED setup as well.

What/how do u have your illumination wire connected?

I didn't use the dimmer as it explicitly tells you not to in the instructions...I wired it up to the glove compartment light as that only illuminates with the lights on and it works a treat :)

Mine did what yours did and flickers like hell with the dimmer as it wants an on or off signal basically.