Replace the bad sensor and then confirm the car is otherwise OK. Perform your own compression test on the engine to see if what Nissan says is true.
If what they said is true, they probably did the compression test first and then decided to just tell you straight out that you need a new engine and didnt bother to diagnose why it doesnt run.
If what they said is false, then just pretend it never happened and/or call Nissan corporate and tell them how this dealer attempted to screw you into a new engine and you can probably get your $300 diagnostics back.
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