Do I need food grade plumber's tape?

[IslandLizard]

it looks like the body of the vavle is resting on the nut of the bulkhead.

To me it looks that there is no nut on the outside of the bulkhead. The threads in the valve body tighten the bulkhead on the outside of the tun. With short bulkheads like this that's the only way, as there's no extra space for a nut plus the valve.

In this case, I would put a large diameter washer between the tun wall and the valve to distribute the force. That way the tun wall (which only has foam inside) won't be compressed/deformed as much when tightened sufficiently to create a positive seal.

In this case a few extra windings of teflon tape will likely help making the seal without overtightening, as the bulkhead threads aren't tapered. Some silicone may still be needed, as it does on my rectangular cooler. He doesn't want wort seeping into the foam-filled wall.

 

[Broken Crow]

It can be done and without sealant...Here's own similar non-leaking, single inner o-ring Igloo:

I think I've identified the kit as this: https://www.ontariobeerkegs.com/weldless-mash-king-bazooka-kit.html which is the current version with o-rings that replaced the eternally headachey flat washer version. Here it is:

Assembled thusly (as the OP has done):

It does not use a coupler, but a short 1-1/2" nipple...the central ring is small enough, that between the cooler walls and outer washer, it allows the o-ring to be tightened over it making excess teflon tape unnecessary; the inner o-ring will have smooth contact.
The First Rule of building your own gear is: Always Buy Extra Parts! Particularly; nuts, washers, o-rings, various sizes of couplers. Without resorting to a pipe wrench, if you have 2 spare locknuts here's how you begin:

Wrap your few turns of tape on the inside, then turn the o-ring and grooved locknut(1) all the way to the middle so the o-ring is wrapped over the smooth ring. Turn nut 2 most but not all the way on. Turn and tighten nut 3 against nut 2..very tight and then with a wrench on nut 3; tighten nut 1 till it won't go any further, then with a pipe-wrench, tighten the coupler against it while still holding with a wrench on nut 3. Now that the inside bits are as far on as they go and the coupler is tightened against it; put your wrench on nut 2 and turn nut 3 off and then you can remove nut 2 by hand, wrap the outer part with tape, insert into the cooler, put your big washer on and then get your ball-valve as far on by hand as you can and then tighten it by holding the coupler on the inside with a pipe wrench and turning the whole ball-valve and not the inner coupler.
You're not likely to get the ball-valve in the proper upright position on the first try, so don't torque it all the way until you've rotated it enough by trial and error..You can back it off a bit to rotate, and I should have mentioned above: Put a bit of keg lube on the o-ring anyway. Getting threaded fittings such as a valve oriented in the correct position is one of those things you 'get a feel for' with practice and with the plastic cooler walls, the final position can be a bit tricky to hit...If I remember mine correctly; I hand tightened the ball valve as much as I could and when I finally got the right position, it required about 180° turn with a wrench to get the handle at the top and be fully torqued.
Hope this is helpful.

EDIT: I forgot to mention: I didn't have a 1-1/2" nipple on hand, (But that is what is inside my own Igloo MT) I used a 2" coupler just for the pictures, yours will be shorter than seen here.
Also: If you don't have a couple spare nuts, you can use a pipe-wrench..but be very careful as that can damage the threads, hence the preferance for 'nut-on-nut'.

 

[Beer Viking]

Thanks for all the help guys. It honestly does not leak that much. It might leak out half a can on beer or a can over an hour so I'm not too worries about it. I know that there would be left over liquid in my mashtun anyways. I might just try it again from scratch with a washer.

Thanks again everyone!

 

[Broken Crow]

Thanks for all the help guys. It honestly does not leak that much. It might leak out half a can on beer or a can over an hour so I'm not too worries about it. I know that there would be left over liquid in my mashtun anyways. I might just try it again from scratch with a washer.

Thanks again everyone!

That actually is a cause for concern: The cooler has an inner and an outer wall. If the seepage is coming from the inside, you'll likely begin collecting wort with the insulation in between the 2 layers. I got my own Igloo second hand..It came with the old flat-washer/massive torque but still leaky combo... The guy I bought it from had only used it twice but there was a trail on the fittings when I finally pried them apart and cleaning up the sticky inside was a nasty job! What I outlined above is the procedure I did myself once I cleaned it and discarded most of the former assembly.
Just on a side note; As has been mentioned are Bobby's True Bulkheads. If you're fed up with this ad-hoc thing, then you'll see why those of us who use Bobby's True Bulkheads are so in love with them. They have a large hex nut center with a groove for the o-ring and no threads under the o-ring. They provide true isolation of the inside and out. Here's the inside and outside views of one; (Yes, I bought spares):

Do you have more gear yet to build? Have you considered trying BIAB? ...Just sayin: It might be well worth your time and money in the long run, to look over what's on offer at brewhardware.com As I said above; Bobby's designed and made a number of unique products specifically for homebrew gear and you can't get it anywhere else in the world.
Just some food for thought.

 

[Bobby_M]

The liquid is sneaking between the nipple and the locknut. Applying teflon tape there should stop it. Of course, you also need it between the valve and nipple if it's not already there.

 

[MograhmDeadbraid]

I'm going to take another crack and assembling my mash tun. Do you know if regular plumbers tape is safe or do you use food grade plumber's tape?

Working at an Ace Hardware and helping a number of commercial brewers in the area, I have sold plenty of the standard white teflon to the brewery's. I have not heard of any issues personally. Now, that being the case, i have heard plenty of leaks from not wrapping the tape on right. That is another story for another day.