I've seen a lot of people put silicone gasket compound on the profile gasket to seal it. You've likely seen that too...it's the orange/gray/red/black goop, comes in what looks like a toothpaste tube. And it's not a paper gasket at all...it's a thick rubber one. I'd use a brand new one instead of the silicone, but either method should work. Be sure that gasket gets "pre-loaded" when you install it. The profile gasket is thick, needs to be squished a bit to fit properly. Also check to be sure the head isn't eaten away by coolant...if so, you'll have to resurface it with something tough like metal filled epoxy.
The coolant temp sensor on the radiator is actually the aux fan switch, sometimes called a "fanstat"...it's not a sensor (those are both on the motor, in the head cooling jacket). The fanstat is the same size physically on a few BMW motors. I've swapped the M42 one with M20 switches in the past to test the aux fan system. They do differ in their high/low temp settings though, and (I'd assume) should match the thermostat temp pretty closely. The stock M42 thermostat fully opens at 88degC IIRC. The matching M42 fanstat switches on low at 80degC and high at 88degC.
I'm putting a 92degC thermo & 92/99degC fanstat in mine later this year, hopefully to eke out a bit more fuel mileage.