AM General has developed with a shim that goes under the sensor to space it out a bit from the rotor. Owners that had light wear on the end of the sensor and were having intermittent problems with the truck going into limp home mode reported the problem solved when they installed the shim. The speed sensor is magnetic so it picks up particles from inside the transfer case. Occassionally it needs to be cleaned.
H1 Model Year
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2006