I recently put a Dakota SGI-5E in, and it has different types of inputs and outputs, using the wrong ones resulted in behavior not entirely unlike what you described. (I don't recall exactly, I just couldn't get anywhere reasonable until I figured that out.) This made me wonder if the unit you have (which seems to have a single input and output) works correctly with the van.
A bit of searching found a reference to Quadvan using it, but connecting it to the ABS sensor on the rear differential. -- That might at least be a clue, or if something on the transmission is indeed botched, a workaround.
Keep in mind that if you do take the speed reading from behind the transfer case, that you'll get correct speed and distance in low range, but the transmission will have to be shifted manually. Well, I suppose it'll eventually shift, at some stupid high RPM. This isn't a huge deal, since those transmissions will stay in a gear you select (won't shift into first if you select second.)
'99 EB ex ENG KSWB news van, low rent 4x4 conversion (mostly fixed by now), home built interior.