I've made a couple of adaptors to go down to 1/8 BSP. The trick is to leave most of the material on the outside and only have the tip of the sender poking into the head. Leave the 1/8 BSP threaded section in the head of the adaptor and make the head a bit larger in diameter. Then you only need a hole large enough for the probe to slide through the center of the adaptor.
I also made a drilling and tapping jig to take that hole for the sensor out to a larger size. It's of guide that bolts to the head and aligns the drill perfectly straight and then another jig that holds the tap straight. That way a copper wahser will seal nice under the head of the adaptor. I had to because there was no way the mechanical sender for my autometer guage was going to go in there.
Here's the mechnical sender adaptor. Unfortunately I don't have any pics of the jigs loaded.
Cheers