Hi kmichalopoulos,
Given that your sensor is a bus slave, it shouldn't be occupying the bus and preventing 20737 from booting. *unless you, as the master, started some large data transfer from the sensor then immediately tried to reboot only the 20737--that could cause problems.
Can you elaborate on how you separated the power supplies? Would the sensor and the 20737 chip still exist on the same voltage bus, just with a switch in the middle? Or are they truly separate voltage buses? And with this separation, where did you pull the i2c lines up to? The sensor's bus or the 20737?
If you tried to put them on entirely different buses this could certainly introduce problems if there is a voltage difference between the two buses. The only way I know to isolate voltage levels on an i2c bus is via i2c expander or level shifter. Without either of these, master, slave, and pull ups should all be on a common bus.
For an example implementation of an i2c expander, see the WICED Sense schematic (U4 on page 1): WICED Sense Reference Design Schematic (PDF)
If you want to send your schematic, I can take a look at it and see if anything sticks out to me.
Jacob
