Does anyone know what the correct gap is ?

I had approx 0.5mm less gap then the length of sensor. I put a 1.00mm washer between the sensor and housing so I now have approx 0.5mm clearance.

Based on the crank sensor spec this is OK but is it also OK for the cam sensor ? I guess the cam sensor could cope with quite large clearances as the magnet in it is really stong (compared to the crank sensor) and the lobes it talks to are also bigger