You're kind of limited on what you can do in that area behind the exhaust manifold. Here is what I would suggest. First of all, get one of these fittings..
http://www.mcmaster.com/#4860k141/=os1jl0
That will take you from the 1/8" BSPT to the 1/8" NPT which is what most sending units use.
That fitting is only about 1" long, so I doubt that's the difference between fitting and not, and you'll actually only be about 1/2" longer total since you'll thread the sending unit into the female end of that adapter.
If that isn't enough room, I think your next best bet would be to get an elbow and face the sending unit down, with something like this:
http://www.mcmaster.com/#4464k35/=os1lz8