I have been using the white 565 Loctite for 20 years and it is fine for diesel. The 545 is also good. 565 is fast cure, 545 is high temperature. Both are anaerobic and cures in the absence of air-like most loctite products for thread sealant.
The reason it is a good thing that it dissolves is that if somehow some of it gets in your fuel or hydraulic system etc. it washes away and doesn't block or get stuck anywhere. This is where Teflon tape is not the most recommended material to use on any fittings where small valves and moving parts are in the system. I've seen it first hand. It is a pia. That said if you don't clean both of the threads well and it has fuel in them, there is a good chance it will never cure. It has to be clean.
The primary purpose of it isn't just to seal but also be a lubricant to help obtain positive thread engagement of the tapered threads hence the Teflon, and the sealant part helps fill in the imperfections in the mating surfaces. If you have really bad threads or egged fittings/holes not much will help you. This is why black pipe needs thread tape as it has more imperfections.
IMO brass into aluminum, although it works, is a piss poor way to go. Anodized aluminum fittings into aluminum are much better but more costly. I would even go stainless over brass. Brass and aluminum together react and cause corrosion. I've rounded too many fittings off trying to get them out of aluminum ports in low pressure hydraulic and air valves after a couple years.