The tin foil stuff looks like heat or RF shielding but I have no idea if its factory or not. Seems weird that just those wires would have it and that they would have it INSIDE a plastic loom. I honestly have no idea since I haven't torn that harness down before.
Wires don't just fail from heat. There could be a rub or a kink somewhere. I'm not sure if a simple continuity test on the 2 wires would be enough to show a definite problem or not. With your problem being intermittent, possibly not. Did you try to jumper it like mjr recommended before you tore into it?
And... Yes, its totally possible that's not your problem, but the ECM keeps telling you it is... soo...? Gotta rule out one thing before the next. This one sucks but it beats wasting money on changing parts.
'91 GT 5 Speed