There are several possibility, it could be you have sludge on your pan and it is interfering w/ the sensor. Or the sensor is bunk. Or the sensor is just coated with too much varnish (which you can just clean off).
You mind as well drop the pan, see if there are a ton of sludge.. replace the pan gasket a new sensor. Then see if the old sensor is okay and keep it a spare.. (since the sensor is >$100).
Oil level sensor:
http://www.pelicanparts.com/cgi-bin/...3%203.0i%20M54