That appears to be an attempt at a sealed bearing. The shape implies a design with a purpose. The O-ring needs to fit into the gap in order to seal as designed.
My guess is there's probably a special tool used to install it - something like a sleeve that holds it in place as the bearing...
Did you confirm the functionality of the LM35DT before you installed it? There are multiple vendors with reviews on Amazon that indicate fake / non functional knock-offs are being sold there.
Maybe try heating it directly with a source you know is > 62.4 and see what happens then.
{ crickets } That's disconcerting.
Okey dokie. EBike Noobster here.
I received my TSDZ2 today and I'm finishing up my cooling mods. This morning I went to buy the LM35 and... there's ZERO stock globally unless I want to buy 500 from Digikey at $15.00 per unit, or some of the [according to...