Pat,
There is also a sensor on the RRear caliper too. Unless they changed something, there is only one sensor per axle (f / r).
Others have had good luck with ceramic pads.... I think..but I'd use toyota/lexus brand.
The factory original pads are toyota make and the set for both front brakes cost about $60 @ dealer. Because your car is 9+ years old, your rotors are probably worn/warped. The rotors are the thick metal "pancake" that the pads squeeze against to stop car. These can wear little grooves in them over time, so if they're worn enough, its best to get them 1) "turned" or smoothed out with metal lathe machine or 2) just get whole new rotors. This could very well be causing the "grinding". You can live without the sensor being fixed.
I think the dealer is misleading you about the sensor. If you got it serviced soon after the light came on - it would still be okay. It's made to alert you BEFORE your pads (and sensor) get completed worn out / damaged!! So, they probably ruined it or threw it away or......that's what I think!
New rotors are about $110 each I think....that's what I'd do..Then your good to go for another 100k... Labor to put on is minimal...$100 I'd say....
Lexusparts.com is a source. See what an independent shop that specializes in Lexus would charge to put them on (also get price for rotor to check -save the hassle)