HI... I'm posting this for a friend of mine.

1997 F350 w/ 7.3 auto 2WD.

At speeds above 50 mph the speedo needle will have a 5 mph "bounce" to it--irregardless of the cruise being on or off. Once you engage the cc the engine will start to surge--enough to feel it. The faster you go, the more pronounced it becomes. If I hold the speed with the accelerator pedal and take
the cruise control off then the surging stops--it only happens while the cc is engaged HOWEVER, the speedo needle will still have the "bounce". Any ideas how to cure? At this point, you really can't use the cc at speeds over 55.

 

not sure what year ford stopped using speedo cables. if it has one sounds like it needs to relubed or replaced. had same type problem on my old 87 dakota. new cable fixed it.

 

No speedo cables after '91.

That style of speedometer (the PSOM) is known to go bad occasionally, resulting in this symptom. But before jumping on it, pull the ABS sensor out of the rear axle & inspect it for metal shavings. It will always have SOME, but they should be VERY fine & black. If they're big enough to stick into your skin OR shiny, you have bad things going on in your diff. Open it & inspect.

If it's just loaded with fine black shavings, clean it off & look down the hole at the tone ring. If you get at least one wheel off the ground & the trans/t-case into N, you can spin the d'shaft & check the whole ring for damaged teeth or misalignment. Any damage requires replacing the tone ring, but it's fairly easy & you don't have to re-set the gears when you do it.

For more info on how the PSOM works, read this thread.