There is an pneumatic plunger that locks into the divot on the spindle. You should have 80-90 psi air pressure for it to work. When it aligns with the notch in the spindle, the hall effect sensor should be lined up with the magnet. If they aren't lined up then the pulley wasn't installed properly. I honestly haven't seen a pulley setup like that on a 4020 but, I haven't seen a 4020A either. The pulley and spindle shaft have alignment marks, and there are several. You're supposed to use the proper ones for the machine you're working on. This is what performs the alignment I mentioned above.

If your getting no signal at all, even when you align the sensor and magnet by hand then check that circuit. The hall effect sensors have three wires. One for 5vdc, one for ground, and one for the signal. The signal will be about 5vdc until a magnet is over it, then it will become active, and the signal will be about zero. Red is 5 vdc, Black is ground. White is the sensor signal.