Hi Sam,
Unfortunately, the MP4 sine wave controller is not compatible with the MPIII and I have already discovered
(after wasting a lot of time and effort) that my MPIII wouldn't run correctly with the MP4 controller.
According to GM, the stator on the MP4 stator is wound differently to suit the sine wave controller.
You will need to clean the axle and controller housing as much as possible using a wire brush or Scotchpad etc. to remove the existing surface oxidisation and then brush a thin layer of petroleum jelly over the entire surface of the cleaned metal to help prevent it from oxidising again.
It is almost impossible to seal a hubmotor 100% and the tiniest of gaps will allow water on the outside of the hub to be "sucked" into the motor
(through the bearing seals etc.) as warm air inside the motor contracts when the hub cools down. Water from a hose pipe, heavy rain or surface water thrown up onto the motor tend to be the main culprits.
Ideally, a small vent/drain hole should be located at the lowest point in the controller housing to allow the pressure inside and outside the motor to equalise, and also to provide an escape route for any water residue/condensation trapped inside the controller housing.
Take a look at
this post and
this video for more details on testing the operation of the hall sensors.
Alan