I have had boards that develop a crack like that, right through the foam core. I still use a board with a similar stress crack and it is stable and rides well. However, with the stringer broken like that it is just a matter of time until your board flexes too much and becomes unusable.
Could surfboard sanding have made it permanently weaker?
Perhaps, if ...
The disclaimer: I'm not a surfer but I've spent a lot of time working with composite kayaks, and I've done some rapid research into surfboard construction.
Foam, stringer, fibreglass shell, gelcoat
The polyester foam has minimal strutural use, it's primary function is to be a mould around which to wrap the fibreglass though it does have some ...