My mechanical sending unit hits the thermostat if I put the thermostat on top. I even tried the smaller stat on bottom falls through hole. Large thermostat on bottom the housing leaks (I used a gasket top and bottom). May try to trim large thermostat to fit inside Oring thermostat on bottom (use Oring this time) that may solve the problem?
Geez, not sure what to say. Mine worked perfect......I do use a Robert Shaw high Flow, but I'm not sure if that would matter. Can you use a Male/Female pipe fitting to get your sending unit "out" a little for clearance?
If the stat gets mounted below the sending unit, in the event of a stat failure, you'd never know the engine temp before it was too late.