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what tends to happen is water gets into the sensor and the corrosion makes the sensor swell up and then touch the toothed wheel
so I'd do a quick depth measurement with the new sensor and into the hole to double check there will be no clash but I'd say that you will be OK to fit a new part
in that case the toothed wheel may have corroded and swollen I'd use a camera or a good torch to peer into the sensor hole so you can spy on the toothed wheel and turn it through a full turn as there may only be 1 tooth thats damaged
1st check that the brake fluid is up to the mark in the reservoir
providing the car still stops as it should and pulls up evenly then I don't think its going to be the module and I'd check over the wiring to that sensor as if its shorting out
if the speedo isn't reading then yes this points to an issue with the wheel speed sensors as the ABS module uses an average of the speed sensors to generate the signal