My speedo issue was simply this... if I did a "granny" start/accel. then no problem, but if I got on it at all it would thrash around like it had a mind of it's own. When it spasm'd up and down the transmission would drop out of OD into 3rd. That really sucks when your doing 65 MPH.....
Anyway I pulled the speed sensor assembly out, then the removed the speedo gear from the transfer case for inspection.
The gear can be a cause and will show it, if it's bagged. In my case the gear was good, so I replaced the speed sensor. So far this has cured my problem and I'm good to go.
You do need to make sure that your speed sensor is either indexed or not, depending on the truck year.
You will see the little "two fingered" bracket on the sensor if it is indexed for your rearend gearing, which makes it read correctly.
If you replace the sensor put the new one on in EXACTLY the same place as the old came off of. I may be able to post a pic of it if you need one.
Let me know and I'll dig it up in the manual
edit: I scanned and posted the two pics of this in a new pic gallery under my nickname.
bob.