is this sensor internal or external? are they prone to fail? 00 5.4 2wd supercab 80k miles

 

That "sensor" is shift solenoid A.It commands the shift of the transmission along with shift solenoid B.
My recomendation is drop the pan and have a look.
Inspection of the transmission pan will tell you whether your trans is out or whether you just had a solenoid fail.
If the pan looks good install both solenoids (they're pretty easy just take the bolt out and pull em out) and see what happens.
If the pan is dirty it is likely that the solenoid only failed because of a foreign object in it.