Maybe I missed it somewhere, but I'd better ask to be sure...is your engine turbocharged?
The two questions you ask actually depend on each other.
You can either mount the thermocouple (the sending unit) before or after the turbo in the exhaust line. If you mount the thermocouple before the turbo, the absolute maximum temperature you can even remotely safely reach is 1250°F (and I wouldn't run the engine for very long at that temperature). If you mount the thermocouple after the turbo, the maximum safe temperature drops to 1000°F, due to the turbo sucking up a fair amount of the heat (among other things). Given that even a new gauge might not be 100% accurate, I would strongly suggest using a lower number for your max safe, like maybe subtracting 100 or even 200 degrees.
Personally, I prefer the thermocouple to be mounted before the turbo. There, it will react faster to changes within the engine, and will give you a more up-to-date reading on how hard your engine's working. Some people prefer to have the thermocouple mounted after the turbo, due to concerns about the thermocouple breaking and damaging the turbo if it's mounted pre-turbo. But, I've never heard of this actually happening, so I don't see it as something to be too worried about.
If you have a naturally aspirated engine, you want the thermocouple as close to the exhaust manifold as possible (so you'll really only be reading one bank, unforutnately), and follow the "pre-turbo" guidelines mentioned above.
For the color-coded gauge, one of the gauges has the red starting at 1250° and the other gauge has the red starting at 1000°. The first one is for a pre-turbo thermocouple; the second is for a post-turbo thermocouple.
Hope this helps some...good luck!