Hi Matt_H
The sensor is usually located at the mouth of the drive, either right beside the write-protection sensor (sometimes even the same part, a double sensor), or over the right-hand side where the HD hole and matching sensor would be. It's usually a small switch sensor with a springloaded pin sticking out the top which the disk presses down on. They're easy enough to replace if you're any good with a soldering iron, but the simplest thing to do is check their continuity with a multimeter to make sure the sensor itself is the problem...
