Tiny,
You are correct on all counts. Use whatever thread sealant you want on the NPT fittings where they screw into the block. This is what your spec sheet states, and it's SOP for this thread configuration.
The confusion lies with the "sleeve nut". You can see they make no reference to coating this item with white lead or anything...that's because it's a 100% mechanical seal. This has turned into much ado about nothing...I just think the fellow at NAPA gave Tom the wrong fitting. The sleeve nut and sleeve adapter are rare birds.
The installation instructions you linked are perfect...IF you use the proper fittings.
I sure hope I don't have to eat my words/opinion, but it sure as heck won't be the first time.
Stuart