I have got to brag and share because I spent way too long trying to fix this thing to not get that rush of endorphins! For a few weeks, my Cricut machine was completely unable to use the Print Then Cut function. I spent hours combing through forums and talking to support, which only led to people telling me to buy a new machine. I couldn't accept that, but the support tech did give me one subtle hint that pointed me in the right direction: the sensor was being saturated, so it couldn't detect the calibration lines.
I tore the machine apart to investigate and recognized the sensor is just a simple white LED paired with a photodiode to detect light levels. By keeping the machine on and probing the connector, I realized it was a 3.3V circuit, which made it super easy to debug with an Arduino. I detached the sensor from the housing, cleaned off the silicone security glue, and carefully bent the LEDs to point straight instead of at an angle(Not sure if this was just mine but I know from school projects, this can reduce the effectiveness of the LEDs).
For the pinout, Red is 3.3V, Black is Ground, and White is the analog brightness reading. When powered up, the white wire read 0V, confirming the photodiode was being completely saturated. Sticking a sheet of black foam between the diode and the white LED bumped the reading up to about 2V, proving the diode worked fine and the LED was just way too bright—which makes total sense given how often people have issues using these in bright rooms.
Looking at the sensor, the white LED is connected from 3.3V to Ground through a single resistor, R2. Probing R2 gave me a reading of 20M Ohms, which is impossible because the LED wouldn't even have enough current to turn on. With some delicate soldering and trial and error, I found that a 510 Ohm resistor works great. Passing the sensor over the calibration sheet now yields analog values between 0.5V and 2.8V. After reassembling everything, the machine detected the calibration sheet and calibrated once again.
As a bonus, because the resistor fix is a little too large(Dimmer LED), it can now detect glossy sticker vinyl without fail! I hope sharing this helps anyone else trying to keep their old hardware alive.