Thanks, yeah, makes sense. Unfortunately there's not really enough material in the plug that I used to mount the sensor to move the sensor down much so I think I'll leave it at that for now and just monitor it. I had already taken a few mm off the top of the hex plug to move it down (but not by much), and drilled a clearance hole around the end of the sensor in the end of the plug to try to get it in contact with water and not the plug. Wonder if the sensor could be sitting in a small air pocket up inside the plug ? I'll loosen the plug to let any air out and see if it makes a difference.The radiator top of tank will always read higher as it's steam and not coolant.
It could also be that you don't have the senso far enough down into the head.
I've also just checked and the coolant level is the same now after cooling for a few hours as before I started.
Happy it's running again and not getting hot.