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The upstream or pre-cat O2 sensor is the one that does the actual work. Some call it Bank 1, with Bank 2 being the post-cat sensor. The downstream one just double checks that the catalytic converter is doing its job. White deposits are normal - those come from ash in the motor oil (if the car is burning any amount of oil) as well as additives in gasolines and injector cleaners.
If you have pulled the O2 sensor out of the car - I hope that you didn;'t try and "clean" it. If you did, you likely killed the O2 sensor. If you noticed a sharp drop in fuel economy and you stayed onto of the regular maintenance on the car - most likely a dead or dying upstream O2 sensor.
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2002 Corolla S, 1.8L 1ZZ-FE VVT-i
2003 Matrix XRS, 1.8L 2ZZ-GE, VVTL-i (RIP)
2009 Matrix XRS, 2.4L 2AZ-FE VVT-i
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