Place the spring over the thread stock, so it’s resting on the top of the backer nut. The spring will provide a bit of resistance to swiveling the sensor, it isn’t necessary. It would feel a lot looser without it though.
I also put a small section of flexible tubing to cover it, this is purely cosmetic. The tubing needs to be cut a bit shorter than the spring. When you tighten this to the rod, the spring will compress and eliminate the gap.