EV200 drive error ?

[SeaCraftJ2]

I have a Garmin 7212 with a new EV200 connected via SeaTalk to the Garmin NMEA2K backbone. The Ray system is visible on the Garmin network but my Garmin tech said they were not communicating.I also had a Pointe 1 Lawrence course sensor installed which I disconnected. I had this added for Radar overlay purposes but I dont think its needed and I thought it could be confusing the EV200.

Observations and actions:

The R70 heading and my compass are dead on the same heading,
When I turn my wheel in Stand By the rudder indicator and green/red bars seem dead on.
We did an air purge on the steering system.
The Ray tech ran software updates on the AC200 and R70.
I re installed using Dock Side Wiz.

The Ray tech said the fluxgate/heading sensor timed out on the update and consequently he swapped another heading sensor which he said also timed out on the update....?

We had hoped the software updates ( I had 2014 software ) would correct my symptoms. Tech said the update ran on the AC200 and R70 ok.

Here are my symptoms that initiated the service call:

On course engaging 'Auto' an immediate jog right occurs.
Correcting via the R70 dial, course can be adjusted and held for anywhere from 2 - 20 minutes until I get a Drive Error or Drive Fail. I can re-engage into Auto immediately and the same pattern repeats.

Should we be sending the heading sensor back to Ray Marine which is what the tech is now suggesting ? I more inclined to send the AC200 as well....?

My next move is to try the AP again with SeaTalk disconnected and see if I can run the system as a stand alone point and shoot before I start pulling the systems out to send back.

We have isolated power supply as well.

Any suggestions ?