No-weak crank signal

My car was running fine on megasquirt for about a week. One day the car died and would not start. Later i found out that it was a crank signal issue, the only way the car would stay on (runs bad) is by plassing the trigger wheel so close to the sensor that they make contact. on tuner studio the rpm keeps jumping from 0-1200 rpm, every once in a while the rpm pick up is normal. I removed megasquirt and installed my OE computer and the car runs fine. I would like to know if that sound like a mechanical issue, wire harness issue, or a software issue?