Do you have the magnet? If not you won't drill it easily. If it is still in there the magnet is probably why you can't pull it out. There is nothing holding it but the magnet is quite strong and could be clinging to the crank. If the O ring is still in there that will also hold it.
See the DIS article in my cave for how the thing is made.
What ever you do make sure you don't mess up the crank. If the notch wheel gets damaged it could mess with ignition timing. If it breaks up more and drops into the pan, you'll have to pull the pan...
The magnet is that the thing is probably harder than many drill bits. They use those rare earth magnets that are really hard and brittle. Drilling could also break up the sensor more and drop pieces in the pan. I don't think I'd want chunks of that laying in the pan even if they are too large to get thru the oil pump screen.
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The only thing George Orwell got wrong was the year...
The Ogre's Fiero Cave (It's also at the top of every forum page...)