ok, but the inputs are already pulled high internally by 4k7 so surely another pull-up would be bad??

You can see the LED on the sensor flickering unless the tip is 100% covered by the target, this does not match my previous experience of inductive sensors where they are either on or off - NO flickering!

This is not a PNP/NPN issue, these are NPN and wired for NPN normally open.

JAZZ, you use sensors, does the LED flicker?

here's a video...
https://youtu.be/S5PP5sQh5Vk