I'm by NO means an expert, but that looks almost like somebody added an additional temp sensor or something.. The original appears to be there. (lower cylinder, right side of head..) I don't really know.
However, there are no wires attached to it, so if you're hearing arcing there, I'd be looking at the plug wire. It's against the head, and the boot is close to that part..
Maybe the arcing is from the plug wire/boot to the head?
I'm sure someone with much more experience will be along shortly though, with better answers and will probably know for sure what that part is.. LOL
For what it's worth...