The circuit that Wily came up with is shown below.  A simple 40KHz 12v peak to peak square wave signal generator, using a 555 timer oscillator, was fed to the metal needle and the whole vertical indexing system, which was electrically isolated from everything else. 

On the receiver end, a copper foil electrode, which was designed to fit snugly on the bottom of a plastic cup, acted as a holder for the fluid container. 

This electrode formed the other side of a capacitor plate.  When the need made physical contact with the fluid, the 40KHz signal was injected into the fluid.  The signal was then routed through the highly conductive fluid and would induce a similar 40KHz signal at the copper electrode, through capacitance coupling.  The copper plate electrode is connected to a simple receiver circuit.

The fast rise and fall times of the square wave signal produce narrow pulses at the receiver input.  A low power Schmitt trigger acts as a voltage comparator and converts the short pulses into logic pulses. The logic pulses are then connected to a retriggerable one-shot type circuit with a 50ms time constant.  The logic output of the one-shot is then fed to the system’s microprocessor. 

The result is a nice clean logic signal whenever the needle made contact with the fluid. The logic signal was used by the system’s computer to index the needle’s position, keeping just below the fluid surface.