I always use Hylomar Universal Blue to seal any threads such as sump plugs. Never have any leaks using that.
In your case it sounds as if the thread as become distorted. I'd use a brand new sump plug, a new sealing washer, and Hylomar Universal Blue on the thread to seal the threaded joint.
Don't be tempted to over-tighten it.
ChicksFan
October 2011