Ford Repair: Jumpy Speedometer, mercury cougar xr7, powertrain control module

Question
I have a 1996 Mercury Cougar XR7 4.6L V8

Last winter my speedometer started acting up whenever I'd go over a bump or a dip in the road. It was rare back then, but noticable because it affected my cruise-control as well. Over the summer, the problem went away, but now that winter's back in force again, it's almost useless.

Each time I hit a bump in the road, rough pavement, or even a slight right-hand turn/curve, my speedometer drops to or edges down towards zero. My cruise control attempts to correct the speed, unless the "speed" drops below 30, in which case it turns off or pauses the cruise control (by design). So if I try to use cruise, I end up lurching down the road. Also, if the speedo sits at too low a speed for too long while the vehicle is moving at a significantly higher speed, my Overdrive light flashes to warn me that there is something wrong with the transmission because the Powertrain Control Module thinks that the vehicle speed is out of range of what it thinks it should be. And finally, since when I'm taking a right-hand turn the needle sits at 0 until I come out of the curve, and I have electronic-controlled power-steering assist, the steering gets very stiff, presumably because the computer guesses something is wrong and decides to not use assist.

I'm pretty certain, due to these symptoms, that there's an electronic speed sensor somewhere with a loose connection. However, my Haynes manual is useless in helping me find out where it is located. Where would I look?

Answer
Hello and thanks for the question...I'll try to help.
I would have to say that you are right---loose connection.
I would suggest that you get the codes out of the computer --if you have access to a scan tool.
If not I would suggest that you check the VSS (Vehicle Speed Sensor) and also the grounds. The VSS is either located on the transmission, towards the rear, where the drive shafte comes out OR on the rear differential in the housing, on the top.
The grounds that I would check would be ALL around the interior of the engine compartment. Make sure they are good, clean and tight. Particularly the one that is on the left side of the engine compartment, just ahead of the driver's firewall. Also, check the battery ground.
I hope this help,
Erik