I'm not having much joy with this sensor I've tried the silicone that's not working I've tried rubber washers too the new sensor would be the answer but the connection on it is a male it needs to be a female
Cut out a stiff cardboard washer with a square 1/2" hole. Mount it and the old sensor. Put some glue on the cardboard and stick it to the splines of the sensor, making sure it can still spin. Silicone takes too long to set and flexes. There are some construction adhesives that set pretty quick. Maybe too cardboard backings on either side.
This happens to me sometimes with things such a scooter throttles. There are only three wires but they will be different colors. Likely black will go to black so just try the other two and if it does not work, swap them. When it works then solder and seal.
That is a great idea. You can get some more slack. The wires will be different colors so test before soldering and sealing. I like to use 2mm shrink tube on the individual wires, then slide 5mm over them with two going one way and one the other. It looks pro when finished.