If I remember correctly (I havent worked on ISB1's for a while)
That sensor in question is a Cam position sensor.
98. 5-00 had the crank position sensor, that was an actual sensor that read a tone wheel on the crank.
The sensor on your truck reads a plate attached to the cam that is installed behind the cam gear.
This sensor is located on the gear housing near the fuel pump.
Running with this sensor malfunctioning should be protected by the ECM and if it senses something it cant handle it should throw your truck into a limp mode before doing any damage.
You'll know when it isnt running right!
--Justin