How do I diagnose the system for the brake sensors? When pads are ok, should the sensor be an open or closed circuit? So I can tell if it's pads or the circuit.

 

The circuit is closed when the pads are OK. When the pads wear they eventually break the wire which runs through the pad opening he circuit causing the warning light to come on. You should pull each wheel and unplug the pad connectors and check continuity. If the pads are OK then build yourself a cheater and short the two pins on the car side of the connector, one side at a time and see if the light goes out, make sure you clean the connector contacts before you do this test. The problem is typically a broken wire in the pad or a corroded connector.