I've never had that problem, but I can see how it could happen. It's important to apply the tape to the threads only, with no overhang. Here's Don Casey's advice:
"When connecting the supply hose to the solenoid, an adapter is usually required. Wrap the threads of the solenoid end of the adapter with Teflon sealing tape. Do not use Teflon tape on the hose end. The rule is that when the threads form the seal, you need Teflon tape, but not when the seal is formed with a flare, O-ring, or other compression fitting."
The entire article can be found here:
http://www.boatus.com/boattech/Casey/18.htm