For a the last few days, my car has been starting with the oil pressure lower than it usually does...somewhere around 35 psi. As it gets warmer, the pressure drops until it reaches the red portion of the gauge, then drops straight to zero instantly. I tried removing the oil filler cap at the valve cover to take a look in there, and there is a small puddle of oil all the way at the lower part of the valve cover. The rockers and springs seem dry to me, but I've never noticed how they should look like before. Anyway...it seems to me like the oil pump is bad....but I was under the impression that the oil pump either works or doesn't work, nothing in between. Does this sound like the oil pump, or the sender?

Let's simplify the logic a little bit....

Which one is easier to replace? Which one costs less?

Replace it.

Those sending units go bad all the time and give people heart attacks for no real reason. If the engine doesn't seem to be in low oil pressure distress, no clattering lifters and all that, then it probably actually has good oil pressure, and all you really have is a metering problem.

I had the same thing happen to me. Trust me, if your oil pressure was actually at zero, you would have a lost worst things happening than just your gauge dropping. Just replace your sending unit. . . like $10 I think and about 5 minutes. I'm on my 3rd one in 12K miles.

As for an oil leak coming out of your valve covers; what can I say: It's a SBC.