Can something as simple as a bad o-ring cause complete sensor failure?

About half a week ago my car began stalling out, seemingly at random; at first I thought it might have been an issue of air bubbles in the coolant passing over the coolant temperature sensor – there were a couple of loose hose clamps on coolant lines going into the radiator, and I had been loosing coolant fairly steadily for a while. The hose clamps were tightened, the coolant was topped off, and all the air was bled from the system. Problem fixed, right?

Nope. My car still kept stalling. Eventually a DTC was tripped, P0345, for the bank two cam position sensor – which made sense, given that (after some test drives and reflection on previous stalls) the car would generally only stall at low speeds, and particularly while decelerating. I got under the hood, and when I pulled a couple of hoses out of the way, I noticed that the cam position sensor and its connector were absolutely filthy, completely covered in black grease and sludge:

I hit the sensor and connector with an insane amount of electronics cleaner and wiped down the general area, giving it a good cleaning. I checked the electrical connections for any kind of damage or wear, but found none. I then took the car for a test drive, but to no avail – it stalled yet again. I then unbolted the sensor and pulled it from the case, and this is what I found: a completely flattened o-ring.

Which leads me to my ultimate question: I’ve since installed a new sensor and had zero stalls in the past week or so and I’m now just waiting for the DTC to clear itself – is it possible that something as simple as a bad o-ring causing oil leakage could have brought this sensor to the point of failure?