"I was thinking teflon tape - but you do have some odds that the tape, even with multiple layers, could have metal to metal contact.
Would you need to remove/unscrew this item?"
PTFE (teflon) sealant, not the tape variety. Only reason to remove would be if/when the sender fails. Might just need to plumb an inline setup....I've had bad luck with aftermarket temp senders for water temp. Replaced 3 within a year due to flat out failure on my Cutty, 2 Derale and one from Oreillys. The end result was a manual switch with one eye on the gauge...
So, I just reaffirmed that my fear is a reality. Inline it is, thanks everyone.