The sensor DOES ground through the exhaust.  The wire does not ground at
both ends, as it is an unbalanced shielded cable.  If it were to ground at
both ends, ground loops could be set up, resulting in ineffective rejection
of interfering signals.  By grounding only at the ECU end of the cable, all
interference is dissipated effectively to ground very near the physical
reference to ground for the microprocessor.  Believe it or not, too many
grounds can often result in more problems than insufficient grounds, and
this small-signal application is one of them.  To test, unplug from both the
ECU and sensor.  You should read essentially zero ohms on the center
conductor to from sensor to ECU plug, and infinite resistance (>1 Megohm)
from center conductor to shield.  If any leakage from center to shield, it
should be replaced.
Steve Sandlin
Steve's Lock Shoppe
http://www.steveslockshop.com

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