So I'm putting my car back together after paint and I can't get the release lever to work properly. The only way the lid closes and releases is if I let the cable sit as shown in the picture. What am I doing wrong?

Here you go this may help you in your endeavor.

The first photo is from the 86 Fiero FSM (Factory Service Manual):


This next photo is actual routing on my parts car:


This last photo is from the Fiero M22 parts manual:



Hope these photos are some help! Good luck.......

Not sure what's wrong w/ your car... In general:

Push/Pull cables can bind bending too tight. Tank, hood, shifter(s), heater(s) cables are all Push/pull types w/ min radius and other "rules" to work and last.
In turn the latch won't work right.

Latch can be dirty or paint over-spray in/on it causing binding at that point.

Can be a mix of both causing your problem.

Spring in the latch barely latch the cap too. So binding latch/cable/both easily keeps latch part or all the way open.
Cap/cover Ear barely touches the latch too.

(Both are why owners book shows can release a jammed cap/cover w/ a credit card etc.)

If cap/cover, the hinge for that or plastic well where fill port is mounted have problems then any latch problems often gets worse or causes latch problems.

My both Fieros the cap/cover barely closes and been that way forever. Other cars w/ hidden gas caps often have similar issues. Not made as security but cosmetic items. (Most Locking Gas Caps are Security Theater too.)

⚠️ Warning: Don't use strong solvents or any oil to clean/lube the hinge, cable or latch. Both may seem to work then cause big problems soon after. Even Brake Cleaner can wreck plastic parts.

------------------
Dr. Ian Malcolm: Yeah, but your scientists were so preoccupied with whether or not they could, they didn't stop to think if they should.
(Jurassic Park)

The Ogre's Fiero Cave

Check the interior latch. I couldn't get mine to work and I thought it was the cable routing and latch at the fuel door, it wasn't. The latch on the inside door had worn out and it wouldn't allow the cable to 'pull' as designed. Found a fresh latch at the local p&p, made the install and it fixed the issue. You do have to disassemble a bunch of interior trim to get to it and needless to say it's brittle so be careful.

Thanks for of the input guys, I finally figured it out. Apparently I didn't have the end of the cable seated properly in the latch housing on the gas cap end.