[jee7s]

I hadn't realized the implications of that last comment in your first post.

Referring back to my earlier comments about hooking it up wrong, I was referring to your application of 5V to the sensor line.

When that connection was made, you hooked up voltage directly to the collector of the NPN transistor at the output. When the sensor switched to indicate the object was present, there was no resistor to limit current.

So, yes, you may have fried the output by exceeding the power dissipation spec of the output transistor (which isn't in the datasheet...but I'm sure is not large). If you have an untouched sensor, try hooking it up and see if you get the same result. The flicker you observe could be that potentially damaged transistor.