The o2 is doing what it was built to do. Just because it sets a code does not mean that the sensor is bad. All the code is telling you is that it has detected a problem . Now that problem might be a bad sensor or that it sees something not right.
That is why all the other readings are so important.
Dam put that o-2 wireing back the way it is supposed to be DAM why would anyone do that!!
The block learn and intergrater are the long term and short term fuel programs. What that means is if it is seeing a rich mixture(like what you have) the computer will try to lean out the system and the base 128 reading will change up or down.
Code 12 better be there that means the ecm is able to give you the codes of any problems.
I would do this next
Let the engine idle for about 30 min. do not rev it then shut it down and pull the plugs out 1 at a time and see if any smell like gas real bad or are black in color.
With the plugs out let the engine cool for about 30 min and then have some one crank it over with the plugs out while you stand off to the side and look for a large amounts of fuel getting blown out of a cylinder