The only connection between the cup and the needle shaft is magnetic. All mechanical speedos and tachs work by spinning a magnet to create rotary force moves the needle. There may be drag at the bronze bushing where the cable comes into the tach that is causing the cable to wind and unwind, in turn causing your needle to jump around. I've never had a lot of luck oiling or greasing bronze bushings on anything; electric motors, tachs, speedos, fans, etc. The problem is that they are originally made with bronze powder imbedded with graphite or other lube, and when it is gone from the surface that contacts the shaft, there isn't really any way to re-embed new lube into the material. Putting new lube on the surface will last only a short time. You really have to make a new bushing from oil-lite or graphite bronze.
There could be a particle of dirt or metal that has gotten into the clearance between the cup and platform that is causing abnormal drag, not certain how you check for that or get it out.
One thing that may help is to put a drop of oil at the pivot point(s) of the needle shaft to damp its movement. Many gages are built this way and will get "jumpy" when the damping oil eventually evaporates over the years.
