Put the probe in the pan unless you run an oil cooler then I would put it there. A partially filled or totally filled block will always be able to have lower water temps, its not doing much at all in terms of cooling anything other than the heads. But oil temps will rise as you are getting no cooling of the bloc or very little. I have a street car with a partial fill and does the same thing. However I have an oil cooler on it and the car has logged thousands of miles like that with no ill affects other than lowish oil pressure at idle when hot.