I would run the heater ground to the chassis or block, and the system ground should be shared with the ECU as you've done.
If you've calibrated the sensor in free air, and you don't have any exhaust leaks
, and the sensor isn't damaged, you should be in good shape.
I know I've dropped two sensors in the past when goofing off... that can definitely hurt them. They tend to fall right on their tips.
Also, silicone... If you've ever used silicone anywhere in your exhaust on gaskets/whatever, and you didn't specifically opt for o2 sensor safe silicone, that will toast the sensor quick.
Try moving that heater ground, and if you're still having trouble either shoot Innovate tech support an email or shoot us one at websales AT diyautotune DOT com and we'll hook you up with our guy there who is really quick to get to the bottom of issues like this, or in the rare occasion when all else fails he won't hesitate to replace the unit if it's got an issue (i don't even know if you bought this from us but either way we can help you out with it). Personally I've never had a problem with a properly wired and configured LC-1 myself. I did toast my LM-1 once using an incompatible USB converter... but that was my own fault
. (Yes, Innovate fixed it for me as they would for anyone, they truly rock...)