I am having the exact same problem. I tried 140Knots, 150Knots for landing speeds and 2000-4000AGL altitudes and as soon as the localizer hits green on the panel I select the GS. The light goes yellow on the panel and the ALT switch on the AP goes from hold to the center position. Moving the altitude switch back to hold does nothing. The plane begins to drop 500-1000fpm eventhough the glideslope is not captured and I am well below capture. I too, reset the AP to LOC capture and disconnect the Altitude control function of the AP (Switch down) and manually fly the plane in.

On a second note, How the heck do you see out the window to fly the bird in on manual landings with VC? No matter how I set the VC, I cannot see out the window to land the plane.