About the "nicked" sensor. It is easy to push it in too far where it will make contact with the tone ring on the axle. Sounds like they just shoved it in there. At any rate, it is a simple sensor. The one I used in my former 1999 B5 was only $12. Worked perfectly. OEM fit and finish. Now, it is a crap shoot with low cost parts, but me being a home mechanic, I can certainly take that risk. Only costs relative pennies and a few minutes of my time.
https://www.amazon.com/YourRadiator.../B01B5BHIKC/ref=sr_1_1?ie=UTF8&qid=1489834744&sr=8-1&keywords=passat+abs+sensor
Better than I can describe:
"The pole pin inside a coil is connected to a permanent magnet and the magnetic field extends to the pulse wheel (tone ring on axle). The rotational movement of the pulse wheel and the associated alternation of teeth and gaps effects a change in the magnetic flux through the pulse wheel and the coil. The changing magnetic field induces an alternating voltage in the coil that can be measured."
Locating the sensor too close, too far away, or nicking the outer case of it can affect the voltage created by the sensor that the ABS computer is measuring.
This is one of those jobs that can be done by just about anyone that can remove a wheel, IMO. It is nothing more than removing the wheel, unplugging connectors, pulling the sensor out, and reinstalling; routing the wiring as it was from the factory. For that cheap of a part and low risk of danger from poor installation (provided the tire/wheel is reinstalled correctly), you can burn through a couple sensors and learn at the same time for cheap.
I am all for using OEM/OE Supplier parts on these cars, but this doesn't have to be one of them if you can install yourself.