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The oil pressure sensor is on the passenger's side, above the starter towards the rear of the engine next to bell housing.
This is just a sensor. It has a 3-wire connector going to it (violet/whit, grey/yellow, black/lt. blue), this sensor sends a signal that registers on the gauge on the dash.
No. I believe you have the wrong part. From what you describe, you've got the sensor for an "idiot light" and not a "gauge". The OEM part# XXXXX: 56028807AB - take that to the parts store and have them "cross over" this number to aftermarket.
Thats a very common problem with Jeep. I just did one on a 2004 G/C. Usually is the Oil Pressure Sensor. However, no, these 2 sensors are not interchangable. Try a "better" parts store, like NAPA. Those guys at AutoZone really don't know their stuff to well. Like i say, bring the OEM# XXXXX you, and most places can just "cross over" this number to the applicable after market part.