First checks:
if it is a hall sensor (uses magnet with right pole up, and will fire if moved very slowly) or a proximity switch (uses steel part proximity, will not care which side up, and will fire when passed very slowly) or an induction pickup coil (uses magnet, right side up, but needs to pass fairly fast).

The test you did already shows the sensor to be bad, probably due to creating a spark without proper ground connection. The spark energy instantly kills the sensor.