VSS - P0500 causing tranny craziness

Good day All, first post - I breifly searched for an answer but didn't see what i was looking for, so here goes. I drive a Ford E350 diesel w/4AOD tranny. I have suffered a inttermitent loss of com w/VSS that causes eratic behavior from the tranny. she bangs into gear, drops 1-2 gears on the highway, has distroyed u joints, and made my life miserable! i say "loss of com" but maybe it's not. I have replaced sensor twice (one aft mrkt, one ford). i have traced the wiring from sensor to dash (sensor wires are a twisted pair blk/yel from the sensor directly to the speedo mod.). after reading [url "www.obd-codes.com/forums/1646-obd-codes-p0500-speed-sensor-malfunction-1997-mercury-tracer.html"]this[/url] which i found on google aft asking about my fault code i thought: "there is hope!" any ideas?

I would want to know if I was losing speed signal to the cluster, or at the sensor. Sometimes those instrument clusters cause alot of problems. If you lose signal at the cluster and your speedometer drops out, then you're probably gonna want to unplug the cluster and make sure the cluster isn't shorting the signal. Then, check the sensor. If you lose your speedometer and the signal stays, I'd suspect a bad cluster. It's worth a trip to the local garage.

thanks darkroom - i did forget to mention that i do not loose speedo function, the OD light blinks when i have these troubles, sometimes during an event the OD light will stop blinking and i have a return of smooth shifting but not necessarilly in the correct gears. i pulled into my drive in third gear the other day but it shifted smoothly after OD blink. i have thought of running fresh wires and/or chking grounds at the cluster. last two days it's run fine. this has been going on for couple years. R

Well, if your speedometer works, then forget the cluster stuff. The speed sensor ohms should be 800-2500 ohms. It's not likely it's the problem because you're not losing speed signal. It's likely between the ABS module and the transmission module. Check for any ABS codes and post them.