[sbw1]

When I bought used 2004 31 Open in May 2016, seller demonstrated that both water gauges (located between AC / DC panel) lit up what seemed to be correctly.  Fresh water full (all green lights) and holding tank empty (1 green light)
All season long both gauges never left empty (1 green)....despite knowing we needed a pump out and fresh water tanks had been filled. Am I missing something?

No. You are not missing something. We bought a new 2004 32 Open in 2004. This was our first warranty claim. The dealer told us that they would repair it one time and that the repair would fail again due to the poor design. We had it fixed under warranty. It failed maybe 3 weeks later. The dealer recommended that we purchase a Tank Tender monitor and be done with the issue. We did that in 2004 and the Tank Tender has worked flawlessly ever since. We can tell when the holding tank needs to be pumped pretty much to the number of flushes remaining. Also displays potable water levels very accurately. Our dealer told us that they see very old Hatteras boats from the 70s with the same monitors that are still working like new. If you Google the product name you will find the company which still makes the same gauge we have on our boat. Tiara should install these gauges as original equipment.