That is the sensor on the back of the cut carriage that senses the media width. I'm not sure what model that is but on my xc 540 it is held on with one screw, if yours is the same it is probably broke and needs to be replaced. If you take that black cover off there should be 2 allen head bolts that attach the whole cut carriage to the linear bearing. If you take those 2 bolts out you should be able to replace it fairly easily. Be careful with the ribbon cable that's attached to the cut carriage, if you don't get it lined up in the middle of the guide it rides in when you put it back together you can damage the ribbon cable, and eventually damage the main board (I know because we've done it).
Hope this helps.