Clean the rust off. I've seen other cars with the gear ring and the sensor is like a magnet that reads when a large chunk of metal moves by it. When there are lots of chunks (like a gear) moving by, it tracks the speed. It's when it reads differently that it knows one wheel is slipping or locked up. The sensor could be bad or the gear could be too rusty for it to read. Cleaning is cheaper.
You'd think it would have a fail safe if it were the sensor...