Nissan Titan with 1st gear, low range surge climbing steep grade at 5 mph

A good old friend has problem with Nissan, Titan. I will get more information as to year, engine, transmission and axle ratio soon. Here's
his problem with interesting story:
I think I may be getting somewhere getting my Titan fixed. I think I mentioned the problem, but a long time back. When I get it down in 1st gear, low range and taching about 1500RPM, 5mph it will intermittently start to surge off and on. I finally got the factory rep to meet me at the dealer and I took him out for a run. He has never done any 4wd before and couldn't understand why anyone would want to run that slow.
The truck acted up while I had the factory rep riding with me and with his computer hooked up. It was jumping so bad he had trouble hitting the right menus on his pen enabled screen. I was able to drive around a circular piece of road and keep it doing is as long as he needed. The ??? news is that everything in the engine and transmission was working fine, other than the RPM jumping up and down. He thinks something is making it go into a fail safe mode unnecessarily. The only thing that could do that is the engine computer so he is going to talk to the factory about replacing it. The fun part was before it started acting up I took him up a very steep area that was barely a road. He didn't realize the truck could even make it up there or that I would try it. He tried to act calm, but I could tell he was shook. He now knows a little better what 4wding is about. Actually it wasn't that bad. I didn't have the confidence to try anything real rough with the possibility of it starting to act up in a bad spot.
I was thinking it might be injection problem with bad spray pattern, fuel filter or intermittent engine sensor. Any advanced thoughts before I get all the essential information on engine, etc. is appreciated. Anyone with similar problem?

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