2006 Ford Escape 4WD light always flashes and ABS sensor light is always on

Your mechanic is wrong, it is a problem. Maybe not drivability wise, but brake wise, yes. I would find another mechanic to work on your car for your safety. Both lights mean you have a wheel sensor issue. On the Escape's my bet is that one of your tone rings is rusted and cracked giving a false reading. Usually the front ones go first. Crawl under the front of vehicle and look at the end of the CV axle that goes into the wheel hub at the brakes, there should be a geared ring. It should not be missing any teeth or split. You can replace the tone ring itself or purchase a new CV axle , which comes with it pre installed. With the ABS light on, that mean you don't have ABS activated, so if you have to panic stop you will need to remember to pump the brakes. Any mechanic can also scan for the ABS codes to know exactly which one of the four corners is the issue and make a proper repair.

Sounds like you need a new mechanic? What the abs light is telling you is it's not working. No abs. Go to a good mechanic.

TDolby is correct except the tone ring does both and the ring is missing one tooth.

With a tone ring that is cracked or missing a tooth the AWD will not function as long as the ABS light is on. The AWD utilizes that ring as well to control the function of the traction control