Thanks again! The Schottky diode works.
To sum things up. The 1N4148TA diode didnt work.
I Wired the LJ12A3-4-Z/BX inductive sensor as follows:
Power wires to always on fan channel (24V)
Blue is Ground
Brown is 24V
Signal wire to Z stop pin of Z stop Connector
Black - (Cathode) Schottky Diode - Z stop pin
In config I set
M574 Z2 S0 ; z axis homes in positive direction active low
And my Z home file
G91 ; Relative positioning
G1 Z200 F420 S1 ; Move quickly to endstop
G1 Z-2 ; Back off of endstop
G1 Z3 F60 S1 ; Move slowly to endstop
G92 Z186.5 ; Set Z axis position
G90 ; Absolute positioning
I hope this will help anyone with the same question.