To clarify.....the primer set you are using is amplifying a smaller band than expected which, when sequenced, shows homology to your gene of interest but which is missing certain bits of sequence?  What is you template DNA - cDNA or genomic?

The defnition of a pseudogene is one that has lost the ability to code for a protein so I guess that includes mRNA that has been transcribed but cannot be translated.

Do you still get an open reading frame with the 'new' sequence (taking the frame from an area of high similarity)?  If you have a stop codon anywhere along the sequence then regardless of similarity it will not result in a translated protein....hence can probably be termed a pseudogene.

If there isn't 100 % similarity between the homologous sections of the fragment and your GOI did you at least identify any genomic scaffold sequence with 100 % similarity ?

Dear Marcus, 

Thanks s much for your response. My DNA template is genomic DNA and the missing sequences are promoter elements. Also, it has a stop codon on the Open reading frame. There is 98% similarity between the sequences of the true gene and identified pseudogene.

I think you have your answer but if you want/need to explore this further then you can generate a primer set from regions of the lowest similarity (ensuring the 3' ends of the primers contain as many mismatches as possible between your GOI and suspected pseudogene) to probe cDNA from your cell line/tissue of interest.