I didn't build Otto, but the problem with putting a sensor like a sharp ir is that the spinning weapon on top circles the entire robot. Any sensor mounted at the height where it would detect a robot would probably have interference from the spinning weapon.
Having a spinning weapon like that is really smart, because the robot doesn't need to aim. Any direction you come from, the robot is going to do damage.
Peanut had to put its sensors on stalks so that they wouldn't be disrupted by the spinning blade. That obviously didn't work out too well. On earlier versions I put the sonar on top and that didn't' work well. I think for my next version I will put the range sensor on the back, and have the robot turn 180 degrees when it senses a robot behind it.
It is a good suggestion though. Otto's builder is making a new robot for Robogames, so we will see the next generation of autonomous combat.