Here is the deal for that problem right now as I haven't seen in indication that CaptSim is trying to fix this. The AP is supposed to be the same design that was installed in the 727. That is what Boeing used for the 707 as it was a proved design. For the sim what seems to work best is set up your course and tubn on the AP to come to that heading, correcting your attitude with the manual trim or the altitude hold switch on the AP, marked wings level. Once on your base heading, switch off the AP and manually climb with the trim settings after turning off the wings level switch. Once you climb to your altitude, turn the AP back on and hit the wings level again. If you have drifted off your heading you can reaquire the heading as before.                                 Swede

Also, make sure that your Altitude Hold Switch is off