I did not completely remove the tapered hole. I tapped in but not all the way. In either case the anode rod doesn't seem to really fit great and this is even in a new fitting. I guess it is supposed to be really tight? No way it screws all the way to the existing hole or any NPT fitting.
What I ended up doing to prevent further degradation of the threaded hole is I used a brass male to male adapter combined with a female to female adapter. I used teflon and tightened both down tight enough to where they will not move when the anode rode is inserted. So now when I insert or remove the rod it is only in the new brass fitting instead of the original degraded threaded hold. No leaks whatsoever but I do remove the old teflon and add more when I remove and reinsert. Seems to work great. The only minor drawback is the rod doesn't go as far into the tank but the entire rod is still exposed to water. I kinda like the drain hole protruding out further from the tank.