The altitude hold function on my LNC2 never worked since the day I bought the airplane (coming up on 12 months ago).  I'll leave out all of the things we tried to fix it that had no effect, and limit it to the relevant steps that actually had a positive change.  Note, the alt hold is now working very well (with one caveat, which I'll note at the end).  The purpose of posting this is to have it in the archive, in case anyone else runs into similar issues with their AP in the future.

- trim indicators (ie, add up trim, add down trim) were reversed
- pitch servo was reversed
- pressure transducer (pin 16) was apparently wired with someone counting the pins from the wrong part of the connector, so no static port data was reaching the AP

All of those things were fixed, resulting in an altitude hold that almost worked perfectly. It was a good 1/2 - 1 second 'behind' the airplane. 

The final fix was to disconnect the static line from the pressure transducer, venting it to the cabin.  For an STEC-50, which only has altitude hold (doesn't have the ability to maintain a specified altitude), this was a great solution.

Now it works like a champ!

The only hitch now is that when I transmit on radio, the alt hold (and hdg hold for that matter, but it's less noticeable) functions are significantly disrupted.  My guess is that the transmission from the com radio is hurting the signal from the pressure transducer back to the AP. I am going to research the possibility of adding some shielding to that cable.

Keith