This may not have anything to do with your situation, but I discovered my S-Tec 55 would do exactly the same thing when I tried to use the manual trim with the altitude hold engaged. I tried to increase my altitude with the manual trim (this can apparently only be done with the VS knob) while the autopilot tried to maintain altitude. When the computer failed from the conflicting input, the plane was in a very nose-down trim setting. Quite surprising. Careful reading in the manual states the error of my ways. Well, I hope this can help in some way.

I have a T210L with the same autopilot.  A similar problem came up several years ago.  I had everything checked and double-checked.  No help - so the only logical solution I could think of as an engineer were the wiring harnesses.  And sure enough, one of  pins inside a connecter under the dash had backed off causing this problem.  Easy fix, but became a costly one!

I had the same problem with my Beech.  After spending almost $6000, we found that a static line "t" fitting had either insect larve or nest inside.  All ground checks indicated that unit worked properly in all phases.

Good luck, I hope this helps.

Tony Wright