This is a problem with the sensor in your picker cup, which is either being caused by a faulty sensor, a communication problem between the sensor and the control board, or else a hardware issue like a Y motor board, or maybe even the control board. The control board is probably the least likely culprit, so don't start there.
First, I'll give you the short solution that will at least get your machine running. You have a sensor on the cup, and on the port. The cup sensor is mostly redundant, and is there to try and prevent the cup from ejecting a product from a selection if there is already a product in the cup for some reason, in which case the product ejected would fall and end up on the floor of the machine and/or explode. It also can save time during the vending process if the cup knows right away if something didn't vend, instead of having to wait to try and make a delivery at the port, then figuring it out then. Therefore, the cup sensor can be turned off, and it won't cause any problems, and this problem you're having will go away. Hit the Service Mode button twice(Test Mode)>then hit F>*>F (it should say cup sensor on at this point)>hit * and it should say cup sensor off. Now the machine will work fine, and sometimes, I've seen machines start working again with no problems just by turning the cup sensor off, vending an item, then going back in and turning it back on again.
In the event you really want the cup sensor to work and be on:
If turning the cup sensor off and on doesn't permanently fix the problem, you next need to take the cover off your Y motor board, turn the machine off, get a toothbrush and a rag, unplug everything from the Y motor board, and use the toothbrush to clean all the thick solid grease that you can from the connections on the Y motor board, and the harnesses connectors that connect to the Y motor board. Crane used a solid dielectric grease on those connections until the late 2010s, and that grease is too thick for those connections and creates a hydraulic effect and causes connection problems. Wipe the toothbrush on your rag as you go to get the grease off the brush. Ideally, you should use a spray-on grease like this after removing the solid stuff, although there will still be enough residue from the solid that it will be okay for a while.
If you still have problems after cleaning grease, you could take the bulging cover part of the cup where the bottle sits off and make sure that the sensor wire is attached properly to the plate underneath where a bottle would sit in the cup. If it is, I would try a different cup. If the problem persists, you could test one of your cups in another machine if you have another machine to make sure the cup is okay. If the cup works in another machine, or if you don't have another machine to test the cup in, then your next step would be to replace the E-chain harness between the cup and the Y motor board, and then the control board.