1997 Ford Explorer VSS problem?

Hi everyone. I own a 1997 Ford Explorer XL 4.0L OHV 4WD with a 5R55E automatic transmission, and recently experienced a strange problem that I believe is related to the vehicle speed sensor. I have only had this happen during one day of driving, but it occurred multiple times. Basically, after driving the truck for about an hour, and then letting it sit for about 3 hours, I was driving home and got roughly half way or 30 minutes into my drive. There was a loud bang noise while cruising at 100km/h, which occurred again several times within a few minutes, and gave a feeling like you were getting rear ended by another vehicle. Each time this occurred, the speedo needle would jump around to all different speeds, and the 4WD Low and High lights would flash. This kept happening randomly for the remainder of the drive home. The outside temperature was about 24 degrees celcius, and while I did stop a couple of times looking for something wrong, I couldn’t visually see any problems. While I was stopped, I did try shifting from Auto into 4WD High or Low but found the indicator light for either mode did not come on, and 4WD did not appear to engage. I got home and connected my scanner and found no DTC’s, but the truck has seemed to be a little sluggish and shifts a bit rough since that day. After parking it for the rest of that day, I tried engaging 4WD the next morning before I left for work and it appeared to engage into High or Low just fine. The correct light for each mode lit up on the dash, and I could feel it engage and disengage from 4WD Low. The speedo has read fine since, but the shifting still didn’t seem normal, so I connected my scan tool and had someone monitor live data while I drove. On the highway at 70 km/h, the tach gauge and reading on the live data matched, but the speedo information didn’t. The speedo live data never moved from 0 km/h, and the scan tool showed the truck was running in Closed Loop with fuel trims and oxygen sensors showing -100.00. Today I visually inspected the vehicle speed sensor on the LH side of the transfer case, and it initially appeared to be loose in the case housing. Upon further inspection, the two halves of the sensor were not tightly fit together, and actually felt very sloppy and loose. There was also thick grey fluid, almost like anti-sieze in color, leaking from were the two sensor halves meet. I measured the sensor resistance and it is 227 ohms, which is within spec from the info I have found. I am figuring that I should replace this sensor as a starting point, but was wondering if anyone else has ever encountered this or had any other suggestions?