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Conveivably, it could be bad. If the sensor can't tell where the camshaft is in its cycle, it could mis-time, allowing Pistons to hit valves, causing real problems. I wouldn't encourage using the car till diagnosed and repaired.
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1976 914 2.0
2000 Boxster 2.7 (sold)
1978 911 SC (sold)
1970 914 w/2056 (sold)
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