I would be sure to "bench test" the sensor before installing it for a VSS, using a multimeter or oscilloscope or whatnot, and of course a 12v supply. Stick a screw or screwdriver on the end (it is slightly magnetic) and see if the output goes low (0v).
The driveshaft is not spun to the right position, but you can probably get the idea.
On a slightly different note, I am surprised that it has stuck around so long. My cold welds must not be that bad after all.