home depot, plumbing section, its white, smaller than a roll of electrical tape..
you just wrap a layer or 2 around the outside of the threads on the sender or the plug... and thread it right in.. teflon is very slippery (as you probably know), so it seals up any possible leaks in the threading..
i may be wrong, but I don't think silicone is oil stable... I think this is a classic case of right tool (or material) for the right job... saving lots of headache.
My first car was a 96 neon with an ebay body kit painted by maaco. I was going to put an aluminum spoiler and ebay fart can on it.... Yea. We have definitely all been there like the other guy said. Your car looks very clean now though man. Good job so far.