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Right now I have my timing cover off and I can get to where I need to tap the pan from the inside. Should I do exactly what the directions say or should I drill the hole and stick a nut with a lock washer on the inside of the pan and use a sealent of some sort?
Personally, I would do it as the instructions tell you. The problem with drilling it is it will create a lot of metal shavings that will fall into the pan and odds are a lot will stay behind when you drain the oil. When you punch and tap the pan, very little if any metal shavings find there way into the pan.
I think I can catch all the shavings because I can very easily access the spot where the hole is.
I planning on doing as the instructions but I just wanted to question it before doing it. I figured I could have a tighter seal and less of a chance of getting it knocked loose.
On my car I'm going to have the pan off since I'm doing a motor swap, so I'm welding a bung onto the pan and attaching the brass fitting to that. I made my own bung out of 3/4" steel pipe and threaded the inside of it with a 3/8 NPT tap. Should make for a leak free seal and sturdy to boot.
After you tap the pan, coat the fitting with silicone (like the directions say) and just thread it in. I put silicone around the fitting as well. The seal is excellent and I haven't had any problems whatsoever.