[Ian M Davis]

I have tested the oil sensor for both level and temp. The temp is only one wire. Goes through a resistor to ground.
It tested fine, as did the oil level sensor.
The oil temp gauge seems to be recording the temp quite fine. Runs at around 90 C.
According to the wiring diagrams, there is some wiring going from the instrument cluster back to the ECU. That is the only way the ECU can get this data, as the oil temp gauge goes direct to the instrument cluster.
So I think I'm down to three options.
Faulty cluster. Faulty wiring. Faulty ECU.

Hopefully this works. These are the wiring diagrams I have been using. Diagram 5 shows the oil temp sensor, and Diagram 17 is applicable to my car and does the connection between the instrument cluster and the ECU.

I can't see which diagrams you have but I have the official Peugeot SEDRE diagrams. Your car is the later fully multiplexed version of the 206 (206MUX) so everything is connected by data buses: VAN bus, Can bus, or K-line.

I see from your screen shot of your scanner that your engine ECU is a MM6LP. I think this is the later version with a motorised throttle. I have attached the wiring diagram for the OBD port for a car with that ECU. I am not sure your scanner works that well with your car. I have found in the past that the Peugeot diagnostic tool (Lexia 3 with PP2000 software) works best with the 206MUX. This is because OBD connector has multiple connections. I have attached a wiring diagram for the connector:
Pin 7: K-line to engine ECU main connection
Pin 12: to ABS/ESP brakes
Pin 11: BSI
I think some scanners only use Pin 7.

I have attached a block diagram for the coolant temperature sensor. The sensor is block 4005 it connects to the engine ECU (1320). The ECU then reports the coolant temperature to the BSI via the CAN bus (green line). The BSI then sends the data to the dash cluster (0004) on the CONF VAN bus (red line). If the dash is displaying the correct temperature it means the ECU is working properly and my guess is your scanner is reading the value wrongly.

In the case of the LEDs they do age but I am surprised the turning and engine lights are dim. Are any others dim? There is usually a brightness adjustment but that usually only adjusts the back lighting. If you have a multimeter it may be possible to do some fault finding to find out why the LEDs are dim. One warning about the dash cluster. It and the BSI store the car's mileage. If you change one of these the BSI will compare the two and set both units to the highest milage.

EDIT
One other thing may be worth checking is the cluster earth MC30 and while you are at it MC20 (BSI earth). Location diagrams attached.

 

[Ian M Davis]

Thanks for reposting the diagrams they are the wrong ones for your car. They are for the earlier version of the 206. In about 2002 Peugeot completely changed the electronics on the 206. They went for a multiplex system. Just think of the car as having two main computers with lots peripherals. The main computers are the Engine ECU and the BSI (body system interface). These are connected by a computer bus called a CAN bus. The engine ECU controls the engine and the BSI controls everything else. The dashboard cluster can be thought of as a BSI peripheral. It connects to the BSI via another computer bus. Several other peripherals such as the air-conditioning also connect to the BSI via computer buses.

I have attached wiring diagram that shows how the coolant temperature sensors connects to the engine ECU. There are actually two sensors: 4020 and 4005. 4020 is just a switch and 4005 is a thermistor (temperature dependant resistor). I think 4020 is mounted on the cylinder head. If it gets too hot it closes and short circuits the temperature sensor 4005 to earth. The temperature sensor 4005 should be mounted near the thermostat.
Correction
SEDRE was linking to the coolant sensor for the 1.6l engine instead of the two litre engine. The two litre engine only has one sensor. I have changed the wiring diagram to the correct unit. It makes little difference the temperature sensor (1220) still connects to the ECU (1320).

 

[Ian M Davis]

I think you have done all the tests Haynes Pro suggest on the MAP.

In the case of dash LEDs I don't know of any specific procedures. What I suggest is check the power supply to the dash cluster. I have attached a wiring that shows the power connections from fuse 15 in the BSI to the cluster (0004).
Note: The red lines 9004_ and 9005_ are a data bus made up of two wires which are twisted together.

BSI connector 10V NR is a 10 pin black connector
Cluster connector 18V BA is a 18 pin white connector
All connectors are identified by number of pins and colour (in French)

It may be worth your while downloading a free copy of Peugeot Servicebox. This covers Peugeots up to later 2013. It includes parts lists and SEDRE wiring diagrams - see #22 of https://www.peugeotforums.com/threads/service-box-no-longer-free.348018/page-2#replies