Update: I dug into my fuel pump and gauge readings today; the knock off sender unit has a rectangular vs square float and was hitting the back of the tank.
I promised I would look at the Teflon seal when I dug into this problem and so I did.
As expected the Teflon which is INERT did not react with the gas at all. I actually un-wound and rewound the same piece I put in five months ago. It looked and felt exactly as it did the day I installed it.
The o-ring fix also worked great
I will post update for the right side pump and sender unit since I've had to re-enginneer the float that was hitting the back of the tank.
Apparently the OE sender unit has a lower limit of 1.4 L at the flood stage of the surge tank. The knock off was technically more accurate as it will drop down to 0L much closer to the bottom of the tank but was not accurate at the flood stage but was coincidentally closer than the OE BMW part. I tweaked the float arm to get an accurate reading at the flood stage so I will get a hyper accurate DTE (and as a bonus the gauge actually displays the actual fuel level vs "off by a gallon" the factory builds into the design