1) Remember that a pipe thread is a nominal, not actual size. A 1/4" NPT thread doesn't measure 1/4" anywhere, not to mention they are tapered! For your convenience, the head of this sender is sized for a 16mm wrench. An 11/16" wrench is the closest imperial size although an 11/16" wrench is a bit large for a proper fit. See Pipe Sizes and Why They Are So Confusing
2) The temperature probe has been slightly different diameters over the years. Some owners report the replacement probe (not the threads) is a larger diameter than their original. Since the probe is always a smaller diameter than the threads, we know that the hole in the housing is large enough for the sender to fit through. However, over time, it is not unusual for there to be a buildup of scale inside of the thermostat housing. If that is the case, remove the thermostat housing, remove the scale deposits inside of the housing, and reinstall. Note: Always use a new thermostat housing gasket (see below).
3) Understand that this part is a temperature sender for the temperature gauge, not a temperature switch for an alarm.
4) Regardless if you are installing a water temperature sender or a water temperature switch, never use any type of common PTFE pipe sealing tape or pipe joint compound on the threads. The sender or switch are modulating the connection of the instrument to the ground by way of the engine block. If you insulate the threads, they can't make the connection to ground and the instrument will not function properly.