The Lambda sensor measures the oxygen/fuel mix levels in the exhaust system and based on this information the engine ECU adjusts the fuel injectors and spark timing to ensure the best combustion in the engine and so reduce the amount of emmissions out of the exhaust system. It has nothing to do with the oil light, that is a warning of low oil pressure inside the engine, and low oil pressure means possible damage to the components inside the engine!!.
If the Lambda sensor failsit will normally put on the "Check Engine" warning light normally an engine shaped light with a lightning flash though it, or on some earlier Ka's it was a symbol like an exhaust silencer box with wavvy lines above the box.
nigel, August 2010