I have the same M104 in my 93. Did the oil pressure sensor swap two summers ago.
Despite the tight confines, it took around 15 minutes to do it. You just need a crescent wrench (I forget what size, but since you have the part at hand, you can test fit).
There is just enough room to get one hand in that area where you can feel for the loosening point on the old sensor with your hand and dexteriously work the wrench over to the spot. Not much room to crank the wrench either, but it doesn't take many turns to get it loose enough to remove by hand at this point. A short wrench works best. A really long one won't work.
Got the part and waited a few weeks after to do the install because I feared what you did...too hard to do. But it's surprisingly easy!
Oh yeah, no worries about oil pouring out on top of you while you do this either!