quattroworld

So I swapped in a new (used) transmission during an engine pull. Originally the speedo worked fine for about 30 miles, then it quit and the fuel gauge gets quite erratic. I check VAG and get the 16885 - Vehicle Speed Sensor: Implausible Signal (g22) code, clear it and speedo starts working again. 15 miles later after I turn the car off and restart, nothing works again.

From searching I know that the gas gauge is a by product of the sensor code. Fast forward to yesterday and Im driving a long and my drivers side axle inner flange exploded. So while the car is on the lift I unplug the VSS and a lot of water is in the connector itself and starts to run out of it. Could this be an issue? I have searched and also have seen that it may the magnetic ring inside the transmission, has anyone changed this?

Sidenote: While installing the new axle the flange slide down a bit and the bearings seemed to bind up a bit. When I installed it I used the bolts to pull the flange into the transmission but there was no movement in the axle, I believe this is why the flange exploded. Could this have been giving the VSS a problem?

Any insight would be great. I will be cleaning all the water out of the connector and clearing the code to see if this helps but I would rather also install that magnetic ring now while the axle is out. Any ideas?