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I sincerely doubt that the O2 sensor failure causes the traction control to not work. The "trac " light is illuminated for various problems/codes in the diagnostics including O2 sensor issues, but it should not disable traction control operation if that's what your asking.
Get a second opinion. Is it a Lexus tech that is telling you?
If you have a failed O2 sensor a sure sign of this is if your TRAC light comes on and doesn't go off. Hence causing your TRAC not to work, If you are also smelling a bad odor coming from your exhaust that's another sign of a bad o2 sensor....in my case thesewere the symptons along with an error code 25 and both front o2 sensors needed to be replaced.
check to be sure, but it will turn your "track off" light on, and when the light is on it turns off the "trac" or so i remember when i had the same problem.
but ussually is your 02, they should be changed at about 100-120 miles, but nobody does until they go bad since there about $135 for the sub & $145 for the main.
if your in socal, and your car is OBD I i can check it for you.