You can apply a small amount of RTV to the threads on the transmission sender if you like.  This is a 2 wire unit, so it does not need to be grounded.  Don't apply RTV to the first and second threads.  If you choose to use Teflon tape instead, use 2 wraps, and be careful not to over tighten it when installing.  Silicone RTV is more suited for this application.