ADI PII alt hold issue

I have an issue with my TT ADI PII wrt the altitude hold mode (it hunts ? see below). I have been working with Lucas and finally got to the point of sending my unit to him to bench check. Before sending it to him we tried several configurations. One that did work was to attach the pitot line to the AP static intake. The vert hold worked great (the pitot side was left vented to the cabin). However swapping both lines (pitot to static intake and static to pitot intake) did not work. So I sent it off to Lucas. Lucas just emailed me and said it checks ?OK.? So now I throw it open to any and all suggestions and submit the following relevant data:

Aircraft
Vans RV8 with dual Grand Rapids HX (with internal GPS), SL-30, Garmin 496, TT ADI Pilot II, Static ports aft fuse per Vans drawing.

Aircraft stabilized/trim shot ~ 1 min.
GRT HX: set Autopilot mode to Hdg
TT: Press right button once, TRK light illuminates no aircraft response. Press right button again both TRK and NAV lights illuminate aircraft follows heading set in GRT PFD or will follow flight plan if GRT is set to ENAV.
Press left button ALT light illuminates. After approx. 3 seconds aircraft begins initial pitch down approx -5o, followed by pitch up to approx 8o then pitch down to -8o followed by a more aggressive pitch up to about -4o then an abrupt stop followed by one or two bumps up then a continuation to approx. 8o. The cycle repeats without going divergent and remains approx. 200? +/- the trim altitude.
Thanks,
Don

One data point

I have a similar setup with one difference which is I have the Dynon D100 with their altitude encoder rather than your Grand Rapids. I normally push the left button first on the ADI II to hold altitude and then push the right button for track or Nav. System has worked flawlessly since 2008.
One thing to check is the serial data setting to make sure it is the same between all the systems as this caused me some trouble in Nav mode when I upgraded from the 496 to the 796 but was fixed when I made sure the data settings were the same. I am no expert in this area but other than that I would check the altitude source input to the ADI II, if you have the GTX 327 you can see the pressure altitude from the encoder in the display window and can see if it is changing when in altitude hold mode.

It sounds like you are using the HX to drive the autopilot. There are lots of autopilot settings to play with in the Hx set up menu. If I were you, I would
1. Disconnect the autopilot from the HX, go fly and try the autopilot from its own panel. You will get a no gps warning, I think, but it should function as a wing leveler, and hold altitude. If it passes this test, then the problem is either
2. The HX autopilot seup. Try varying the vertical settings. OR,
3. The two boxes won't communicate, there is a software issue.

I have a Trio Pro, not the TT, autopilot, and when controlled by the HX it would oscillate and go divergent in pitch. The fix was to get the latest software upgrade from Trio. It now works great.

I would also suggest, if you have not already, wiring the HX gps and the portable gps RS232 outputs thru a switch to the autopilot, so if one quits you can use the other to run the autopilot. It also makes this kind of testing easier.