Can anyone help me out with this, I am looking for a temperature sensor which can take a accurate reading for a nitro big block engine and report back the temperature data in some serial output form, RS232, I2C, PWM or anything of the kind.

many many different telemetry units are out there. google around, you'll find some radio systems like Nomadio, you would find systems like Venom temp sensor (kinda crap). Or one of my favorites: http://www.eagletreesystems.com/ (ooo baby, this is a nice unit, but has an excessive amount of functions for your circumstance.)