If it wasn't for what I found, I would be declaring victory! Replaced the right rear wheel speed sensor and no more VSC or ABS lights nor VSC OFF indication. However, I am a bit concerned whether my ordeal is over. Please read on.

When I removed the right rear wheel speed sensor, I found it in rough shape. I mean, either it "grew" into the speed wheel (for some reason - maybe aging, effects of road salt???), OR the wheel bearing is going out/gone causing the axle to shift to where the speed wheel comes into contact with the speed sensor. I can't get any motion out of the wheel (i.e., it doesn't seem to have a bad bearing) there are no other indications (no noise) the bearing is bad.

I'm going to take it for a drive with someone else in the car (maybe because of my deafness I can't hear it).

Anybody seen the wheel speed sensor damage as shown in the photo? This is the right rear wheel speed sensor that I removed from my LS400

 

Drove the car after replacing the wheel speed sensor. Not a sound from the rear wheel.

So, I am cautiously calling it a done deal. If I get the indicating lights back anytime soon, then I will update this thread.

Thanks for all of your help, especially aptoslexus!