Hi Markoz,
Your postings are always helpful and greatly appreciated.  I made the changes you suggested, but no joy:  During a climb in the 727-100 as soon as I engage the AP aileron and elevator paddles with the disc on manual the yoke goes full forward, the pitch angle rapidly goes negative and increases the dive the more I click or hold the increase position of the knob.  The knob controls turns accurately but if I push the knob at the 12:00 o'clock position that also increases the rate of descent.  Both 12 and 6 cause descent but not controlled. The only way I can control climb or descent is to constantly adjust elevator trim.
As I recall, before the GPS switch modification I could begin the climb, establish the rate of climb I wanted, and as soon as I engaged the AP paddles the AP held that rate of climb until level-off without any additional inputs.

Here were my panel.cfg settings before making the changes you suggested (but AFTER the NAV/GPS modification):

[Window03]
//Background_color=0,0,0
//size_mm=427,106
//position=2
//visible=0
//ident=10005
//gauge00=Captain_Sim.p721.P12!P12_001_ap, 0,0, 427,106
Background_color=0,0,0
size_mm=427,130
position=2
visible=0
ident=10005
gauge00=Captain_Sim.p721.P12!P12_001_ap, 0,0, 427,106
gauge01=Cessna!Nav_GPS_Annunciator,                   400, 106, 24, 22
gauge02=Cessna!Nav GPS Switch,                          376, 106, 24, 22

I changed the relevant settings to your numbers, only leaving the annunciator as gauge01 and switch with gauge02 as they were originally, but with the respective changes you suggested.

I'm wondering if something changed in the autopilot section of my aircraft.cfg file.  Here are the settings as they are now:

[autopilot]
autopilot_available=1
flight_director_available=1
default_vertical_speed=1800
autothrottle_available=1
autothrottle_arming_required=1
autothrottle_max_rpm = 90
autothrottle_takeoff_ga=1
pitch_takeoff_ga = 8
max_pitch=10.0
max_pitch_acceleration=1.0
max_pitch_velocity_lo_alt=2.0
max_pitch_velocity_hi_alt=1.5
max_pitch_velocity_lo_alt_breakpoint=20000.0
max_pitch_velocity_hi_alt_breakpoint=28000.0
max_bank=25
max_bank_acceleration=1.8
max_bank_velocity=3.00
max_throttle_rate=0.10
nav_proportional_control=14.00
nav_integrator_control=0.35
nav_derivative_control=0.00
nav_integrator_boundary=2.50
nav_derivative_boundary=0.00
gs_proportional_control=20.0
gs_integrator_control=0.58
gs_derivative_control=0.00
gs_integrator_boundary=0.70
gs_derivative_boundary=0.00
yaw_damper_gain=1.0
autoland_available=0

Thanks in advance for any additional wisdom;  I'm flummuxed.