Haha, yea, these old diesel engines were installed 1960-1990 and having a delicate electronics was not something the designers had to worry about.
Just came back from the boat and with this engine, I noticed that RPM sensor which has two pins, none of them is not connected to the engine block.
So, I think I'll simply purchase new temperature sensors with 2 pins, these are isolated from the engine block. Original sensors tens of years back were this way as well, but nowadays many marine providers try to sell you compatible 1 pin sensors having grounding to engine block.
This way all my sensors and MCU are acting only after this 12V converter.
Yes
If possible, use 5V for the sensors. I even prefer to use separate ground wires for each sensor.
For example for the temperature: resistor at Arduino, signal + GND into twisted pair. At the end only the NTC and don't connect that GND to anything else.
The DS18B20 is often used. Install the DallasTemperature library and it works. It has an absolute accuracy of ±0.5°C. It can be used for the room temperature, for a sous vide, for the heating pipes of a heating system, and so on. You could add it as extra to be sure what the temperature is. For example: outside, room, pipes, engine.
Don't buy the cheap waterproof DS18B20 sensors, they are only waterproof for a day.