Lawler,
I had VDO gages on my car and the only problem I ever had was much like what you describe. I traced it to a loose connector on the sending lead from the speedometer Hall Effect drive. I used the drive a mile method several times and then had the CHP radar check me and it and the tach were right on every time. When diving a mile, just set it on Automatic, drive at any normal speed, don't spin the tires and when you reach your mile marker stop. Do exactly as the papers say and it doesn't make any difference what gears or tires you have, it should be correct. As I stated I did mine several times over the 16 years I owned the car and never had any problem after I found that loose connector. I just got three new wires and ran them from the speedometer to the sensor and that fixed that. If that doesn't cure it, you could have a bad Hall Effect Sensor, but I have never seen one go bad. Or the speedometer head itself could be bad which would be the more likely. But first make sure that you have your sensor and other leads good and that none of them are shorting anywhere. I also saw that cause what you describe on another car.
Edit: In thr full Auto mode which is what I used the needle will not read until you have driven the mile, stopped and pushed the button. It will automatically calibrate the speedometer, sweep the hand across the face to the highest speed and it is ready. I once ran just over a mile to see what it would do, and I always zero my tripometer before calibrating it, and it just added .2 miles to shown that I had driven that far past the mile marker I used. The speed that you drive in or gear you use makes no difference as long as you don't spin the wheels. I never tried the counting the pulse method as it was easier to let the chip do the calculations.
Ron
