when grounded, the car is in gear and when it's not, it's in park (or vice versa). Confirm this by getting your conzult out and notice what the base timing is when idling. You want it to be 15 before setting your timing. If it's 25, ground pin 44 (on RHD cars, you can find it on the (JDM)passenger side of the bay by the fender).
I never wired the switch properly. You'd only ever want to wire it if you plan on putting a remote starter on the car and don't want to chop someones legs off. IIRC, the cruise control will shut off with the clutch pedal switch. No other reason I can think of to use the sensor. Just skip it.