Is the display needle supposed to wave the entire time that the start gate is open? Or is it only supposed to show a quick deflection and return to quiet before the gate is closed?

It depends on the start gate. The swinging needle shows a short circuit. You can simulate the same thing by shorting two wires together that are plugged into channel 0. There is nothing wrong with the situation as long as the needle returns to green when the gate is closed. If it doesn't you have a problem with one of the sensors. Remove cables one at a time until you find the problem.