As this is the '5v transducer' circuit, you can't use the engine block or the battery negative as a '0 reference'. All readings must be reference to the black/pink, not the engine block or battery negative. Any readings with a mutimeter lead on the battery negative or the engine block are invalid. If you have 5 volte between the grey and the black/pink, then the system providing voltage is working fine. The next thing to check is the CPS itself.
Now, if you buy it from Merc it's nasty expensive (like about $160), but you will find a number on it. Search that number in google and you should come up with a few thousand sites, some of whom are selling them. And it shouldn't be more than about $10.... (BTW, when you pull the CPS out can you post the number on it here. I'd like to add it to my list of 'alternate parts supplies')....
The other thing you could do is check the output pulse of the CPS, but you would need an oscilloscope for that. If you are that interested, you can get laptop based oscilloscopes for around $200... I've got a 'Hantek' unit, 40MHz, fantastic for what I need it for...
Chris......