yes it still happens when there not engaged.

How about the grounding on the box with the ECU and other electrinics mounted to the riser?
Aluminum Manifolds vs. Cast Iron?
Maybe run a ground from that box to the block...
I had a similar problem and ran a ground wire for the tach to the block.

we tried grounding both the distributer and the computer to the block and that didn't work either. We ran a test light to every ground on the motors and they all checked out. We also tried adding msd tach filters and they were not compatible with my vdo guages......... We did find that my tachs have dip switches on the back does anyone know what there for ???

I think the switches are for 4, 6 or 8 cylinder engines. You change the setting of the switches based on the number of cylinders.
Dave

Having the same issues with Gaffrig gauges. Just changed over to efi. Jumps at higher rpms @4000.
Need to find some more grounds also I guess.

I'm having a similar problem. Medallion Tach, MSD 6M2 box and MSD distributor. Tach works fine to about 3400 RPM, then as you give it more throttle the needle starts to jump or fluctuate until finally at WOT it reads zero. So far I have run a separate ground from the tach directly to the battery, and a separate trigger wire from the box to the tach. Still works the same. Next I'm going to try a separate power wire from the battery to the tach. If that does not work maybe I'll try the ground from the distributor to the block.

Dave

each tach had an 8 position dip switch panel. I spoke to a formula tech and he suggested contacting VDO and giving them the dip switch configuratuion and see if they can make anything from it. Both MSD and Gaffrig make tach filters that might solve your problems. It's worth a shot. I may be heading for a whole new set of guages if we can't figure this out soon. Formula is now using Livorsi instead of VDO on all there boats now.

update?

I was having the same problem. I checked all my grounds and ran additional grounds just to be sure.
What fixed the problem was a resistor from Livorsi. If you call them and explain the problem they will know the part. On my tachs what you do is splice the resistor onto the signal wire to the tach, and it takes care of the problem.
They also had a newer style resistor that just bolted onto the back of the tach, but it did not fit onto my older tachs, so I used the splice. It worked great, and fixed the problem.
Good luck.