It worked for me. I got a book of John Renbourn guitar pieces out of the library, and it was in standard notation so I set about picking them out very slowly measure by measure. By the end of the book I was beginning to sight read, so I bought a big book of classical guitar pieces and started practicing with some of the simpler Renaissance tunes. A few months later I was sight reading Bach fugues. And I had never thought I'd ever be able to sight read for guitar because the seemingly endless array of fingering possibilities always put me off. You really just have to stick at it constantly without giving up, even when it seems you're making no progress.
One thing I would suggest in your case is to forget about learning to sight read on your main instrument because it sounds like your muscle memory is getting in the way. Pick something you've never played before, like a recorder or penny whistle, something relatively simple and melodic. The idea is that you have not yet developed a muscle memory with this new instrument and so you can concentrate on reading the notes with less chance of your fingers memorizing the piece. Start with really elementary tunes like 3 Blind Mice, or some simple jigs and the ike.