The IAS indicated is a function of pitot and static pressure, independent of TE compensation selections and adjustments. If it showed values significantly at odds with your ASI, then that might provide some clues as to what is going on.
"Electronic" TE is very sensitive to errors in the pneumatic sources. Errors result from 1) non-ideality in the source location (under wing statics...), 2) excess capacity and flows in the system associated with mechanical instruments (the static side of a mechanical ASI is a problem for sure, the pitot side less so, but still noticeable), 3) leaks, whether intentional (say, for a mechanical netto vario) or not, 4) timing differences between pitot and static due to location, parasitic capacity differences, impedance differences.
Except in the case of unshared, probe mounted pitot and static, it's generally best to use a TE probe. The only problem here is that sharing a mechanical vario with a pressure transducer vario on same TE probe raises hell with the electronic vario. I realize this is intensely frustrating... I've been down this road myself!
One final long shot: are you certain the whole system is dry? Accumulated moisture in any of the pneumatic lines can and will cause some very strange behavior (personal experience).
