OK..... a transmission 'expert' can't fix it and the general mechanic can't narrow it down....... (I'm in shit already). My WSM assumes I have the vehicle here and my memory just ain't that good. IIRC. the VSS is taken from the back of the T-case..... or transmission if you've left out any salient points. I'd start with the VSS... particularly with the condition of the wiring at the connector and all the way up to the take-out from the harness. Also check the condition of the driving and driven gears. When you check the wiring, tug lightly on the wires individually to see if any are 'stretchy'.
Do this first, I'm not about to write a whole bunch only to find that no one looked at the right things. Additionally, I'm not about to e-mail my response. If you can't be bothered checking back here, I can't be bothered bending over backwards and e-mailing you. News groups are all about give and take.... NOT take and take.
Anyway... whether the VSS comes from the diff or the tailshaft.... start there, if there is no problem foun we can go further.
Interesting that you felt necessary to mention a transmission 'expert'. Have there been any other repairs done before this problem?
-- Jim Warman snipped-for-privacy@telusplanet.net