The clearance ("air gap") of a Hall effect sensor is a precision specification. Do you recall the crankshaft sensor shims for the Vortec 350 and 4.3? On higher mileage engines, the wear in the crank bearings allowed the crank to move ever so slightly, mostly at high RPM, and the reluctor on the crank would actually contact the sensor tip. GM released a shim kit that was two .005" ring washers to space the CKP sensor away from the reluctor. You installed one and tested, then the other if one wasn't enough. That cam sensor is the same style and if it has visible slack, especially putting it AWAY from the reluctor, then I'd say that was the problem. If the PCM doesn't know where the cam is, it'll shut down all operations.