I bought the silicone and was all ready to do the fix. When I opened the housing to expose the sensor, I saw the sensor was hanging down, not touching the windshield. That explains why it didn't work.
I had my windshield replaced (aftermarket) +1 year ago, and it never worked right. I brought it back to the glass shop 4 times, and they never got the rain sensor right.
Anyway, I clipped the sensor back in place, and tested by spraying a light mist of glass cleaner on the windshield, and the wipers turned on.
I'll take a closer look, but maybe they broke the clips, and the sensor worked itself loose while driving. If thats the case, I'll use some of the silicione I just bought to hold it in place.
Failing that, I'll try the OP's solution.
Thanks again for the post. Your DIY inspired me to open the assembly after 1 year!