The Arduino is powered by a 12V (2A) power source through the DC jack.
I got suggestion to not to use this DC jack. So, instead I use a USB brick charger (1A).
Arduino now doesn't hangs anymore but the voltage drop is still there. Right now it drops to around 4V (and one of the chip on the sensor board is hot)
I think I can safely assume the sensor board is fried.
Put that aside, what are the safety precautions I can take to avoid this mishap in the future? (the sensor is a bit pricy so want to avoid frying the next one)
Thanks