Your results are to be expected. To get actual oil sump temperature, the sensor has to be in direct contact with the oil. I would suggest drilling the drain plug with a through hole and epoxy the sensor in place extending 1" into the oil.

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85 300D turbo pristine w 157k when purchased 167,870 July 2025
83 300 D turbo 297K runs great. SOLD!
83 240D 4 spd manual- parted out then junked