First of all, here is a bit from my manual which does not shed enough light on how to get this done.
Volkswagen Touareg
ENGINE PERFORMANCE 4.2 Liter V8 5V Generic Scan Tool, Engine Code(s): AXQ, BHX
Engine speed (RPM) sensor, checking
Function
The Engine Speed (RPM) Sensor -G28- detects engine speed and reference marks. Without an engine speed
signal, the engine will not start. If the engine speed signal fails while the engine is running, the engine will stop
immediately.
Recommended special tools and equipment
VAG1526 multimeter or VAG1715 multimeter
VAG1594 connector test kit
Wiring diagram
Test requirements
Ground (GND) connections between engine and chassis must be OK.
Ignition switched off.
Test sequence
Disconnect gray 3-pin harness connector (arrow) to Engine Speed (RPM) Sensor -G28-.
Measure sensor resistance between terminals 2+3 at connector to sensor.
Specified value: 480 to 1000 ohms
Check sensor for short circuit between terminals 1+2 as well as 1+3.
Specified value: infinity ohms
If specified values are obtained:
Check wires according to wiring diagram. Refer to Checking wiring.
If specified values are not obtained:
Replace Engine Speed (RPM) Sensor -G28-.
Erase DTC memory of Engine Control Module (ECM). Refer to Diagnostic mode 4: Reset/erase
diagnostic data.
Generate readiness code. Refer to Generating readiness code.
Checking wiring
Connect test box to control module wiring harness. Refer to Connecting test box for wiring test.
Check wires between test box and 3-pin connector for open circuit according to wiring diagram.
Terminal 1 + socket 108
Terminal 2 + socket 90
Terminal 3 + socket 82
Wire resistance: max. 1.5 ohms
Also check wires for short circuit to each other.
Specified value: infinity ohms
If no malfunctions are found in wires:
Remove sensor and check sensor wheel for secure fit, damage, and run-out.
If nothing seems to be wrong with the sensor wheel:
Replace Motronic Engine Control Module (ECM) -J220-. Refer to Engine Control Module (ECM),
replacing.
NOTE: There is a larger-sized gap on the sensor wheel. This gap is the reference mark
and does not mean that the sensor wheel is damaged.
After reading that and looking at a couple of pictures, it was still not clear what it took to remove and replace this sensor. I definitely knew how to test the sensor. Here is the engine bay before I started.
I had to buy spring clamp pliers to remove the spring clamps of the intake hose.
I then removed the intake hose.
Not very much room to work with behind the engine. This is where the upper connection of the sensor is located. As you can see in the second picture.
You can see the gray connector in the mirror. Not an easy location to get your hands.
I also removed the bottom plastic cover.
I also removed part of the hood support so that I had better access.
This process in total took me about 1.5 hours to complete. Not too bad. The part cost about $115 and the dealer would get about 2 hours of labor or about $200.