Wait, so you built a DTG printer out of a C88, meaning you are trying to run shirts through it? Interesting. But I don't think it's a paper sensor that you're looking for. It's the height of the printhead that is probably causing the issue.
Your Epson C88 printer has a MAX paper thickness of 0.27mm (10.63 mil)
If the printhead of the printer doesn't have the appropriate clearance, then the material will not fit and will cause a 'paper jam'.
There are some Epson printers out there that will accept materials such as canvas but shirts, not sure. For canvas, you're looking for at least 23-26 mil thickness. I'm sure shirt fabric is a little thicker especially if it's cotton. There are even velvet surface papers that require like 35 mil thickness but if your printer's printhead cannot move up and down to accept the thick paper feed, you most likely won't be able to do DTG, unless maybe you 'heavily modify' it.
Or are you saying that you CAN print DTG on that C88 but a light comes on after the print is done?