Hi. well done for shutting it off straight away. a quick check before you get too involved, remove the sensor for the oil gauge from the engine block and turn the motor over. if it squirts oil then the gauge is the problem.
this may not be the problem but There are sometimes just interference fit drives on oil and water pumps in diesel engines(means they are just pushed together) its not a great system and is prone to fail. you can fix them by centre punching some dents in the shaft and hamering it back together. carefuly
bush mechanic, December 2007