I did find this tech bulletin that was refered to on another site for this issue. #03-05-25-007C
It says if the speed sensor mounting surface isn’t throughly cleaned it can cause a gap issue. I am going to give this a try when I replace the pads.
That is a possibility. Crusty surface can create enough of a gap to make the sensor go too far out of range.
Some sensors ship with or need shims to make sure they are not grinding on the tone ring. There is also a possibility that an old shim is stuck on the hub. If the new one has a shim on it, two shims could be a problem. Sensor would be too far away from the tone ring.
Make sure you check the surface when you scrub it with a wire brush. If there is an old shim stuck on the hub, you can flick it off with a flat screwdriver, metal scraper or even a knife blade.
If there is no old shim stuck on the hub, the new sensor does have a new shim on it and still not working... You can try the new sensor without the shim it came with. Just be sure to look and feel to make sure the sensor is not grinding on the tone ring. Just slip it in without bolting it in. Turn the hub by hand gently. If you can see the sensor move the slightest bit or you can feel the sensor vibrate with your finger touching the top of the sensor as you rotate the hub... Don't just bolt it in there and drive on it! If it contacts the tone ring without the shim, you definitely need a shim on there to provide clearance.
I did my ABS sensor and found there was, in fact, an old shim still stuck to the hub. I tried no shim and could actually feel the sensor making contact. I added the new shim and was good. For a while...
ABS codes and lights and chimes were pinging on the highway. I ignored those signs, not knowing any better. Eventually the hub completely fell apart.
Keep in mind this: Sometimes, what looks like a simple ABS speed sensor code can be the leading clue that a hub is about to fail. Excess play in the hub can get sloppy enough where the ABS sensors have a hard time picking up the tone ring. Maybe not your issue at all. Just file this cautionary message for the future. Anytime you get an ABS speed sensor code/light/chimes... Be sure to carefully inspect the hubs for excess play.
