That is Hylomar.
I use it infrequently on aircraft panels, to prevent WATER from getting into areas where it could start corrosion. Never used it on threaded connections though.
Having built several diesel tanks, and pressure-tested them with water, I know that diesel can get through microscopic gaps that water cannot.
It does stay soft for many months, perhaps a year or two.
It dissolves easy with petroleum based cleaners like Toluene, MEK, MPK. It might resist diesel, I haven't tried that. It might not resist WMO cocktails with traces of God-knows-what in them.
It won't resist any kind of pressure, it is too soft, so your fittings should have high quality machined threads that interlock tightly. Much of what I've found is Chinese crap with lousy threads.
Hylomar may work, you can be our tester. Maybe rig a test piece and see if it leaks diesel at 10psi?
I'll probably go with an aerospace sealant, like PR-1422, purposely designed to seal jet fuel tanks. This stuff does not leak, if you apply it to CLEAN areas. Using this, I know my dual tank, dual pump, four filter, two heater, three valve fuel system, with 24 connections, will not leak fuel nor allow air into the system.
You can buy it at most aircraft maintenance shops, for around $35 for a 6 ounce tube. It was designed to be mixed all at once, used with a pneumatic gun, then toss the unused portion. I keep the catalyst tube and sealant tube separate, and just mix up small amounts with a pencil, and seal up the unused portions for later use. You need to mix it very well.
PR-1422 Fuel Tank Sealant
Description:
PR-1422 Class A is an aircraft integral fuel tank sealant. It has a service temperature range from -65°F (-54°C) to 250°F (121°C), with intermittent excursions up to 275°F (135°C). This material is designed for brush sealing of fasteners in fuel tanks and other aircraft fuselage sealing applications. The cured sealant maintains excellent elastomeric properties after prolonged exposure to both jet fuel and aviation gas.
PR-1422 Class A is a two-part, dichromate cured polysulfide compound. The uncured material is suitable for application by brush in thickness up to 25 mils. It cures at room temperature to form a resilient sealant having excellent adhesion to common aircraft substrates.
Technical Data Sheet for PR-1422 Class A adobe.gif (112 bytes)
Specifications:
DMQR1082 STM 0233 TMS-N161-02 AMS-S-8802 TYPE I *
LCM40-1218 STM 0236 ASNA4163
LCM40-2180 DHMS-S3.01 STW5-3253
5666061A GC115 ABP4-5141
STM 0833 AIMS04-05-001,002 ABP4-5142
*Product cannot be certified to MIL-S-8802F, Amd 3, Type I
Specification information provided for reference purposes only. Review specification QPL for verification or consult with engineering services.