The earlier Rockets had a brass pin (#7) on a spring (#6) which sat into that hole on the gear position shaft (#5). The shaft rotates with the gear shift drum (#4) and has 7 positions courtesy of the detent wheel (#10), 1-N-2-3-4-5-6.
But of course 6 is not used on our dear Rocket IIIs.
The pin in the 04-09 Rockets (non Roadster non Touring) moved around with the shaft and contacted several spots on the GPS.
Cleaning did these sensors good for that reason.
In the newer Rocket IIIs (Touring and Roadster), it's the other way around - the pin is built into the sensor and moves around with the turret on the GPS face. The contacts are sealed up inside it. The pin sticking out of the GPS must sit into the hole on the end of that gear position shaft, yes.
New style (left) vs old style (right)