Does the oil sender ground to the block? Or is it OK to use Teflon tape when threading the oil sender into the block?

 

As a rule of thumb, if there is only one terminal on the sending unit, whatever it is for- oil, temp, etc...; it grounds through the block.
It's been my experience though that two very tight wraps of tape down near the end of the fitting won't interfere with the grounding since the threads will cut through the tape and make a connection to the block but will help sealing high pressure fittings like oil and fuel. If after tightening there is tape showing outside of the block, there's too much tape.

 

I taped mine up. No problems and I was pretty liberal.

 

Thanks guys!!! I used a little bit and tightened it up.

 

I agree with everything said above, but my TCI trans pressure guage said not to use tape because it will crack the case. I think their lawyers made them wright that though.

 

Nothing will crack the case if you pay attention and don't tighten it up that hard.