The speed sensor is set to work with the stock tires. If you were to put bigger tires, your going faster than what your speedo says, if you have smaller tires, your going slower than what your speedo says.

This will show you what your calibration is.
http://www.miata.net/garage/tirecalc.html

 

old tire diameter/new tire diameter=new gear needed/old gear
Theres the formula needed to figure out what you would need. I was suprised to see this because I actually JUST learned this today in class hahaha

 

If your talking about changing your gear ratio, that wont be affecting your speed that much, thats only going to affect the output power of your tires. Lower gears, slower acceleration and low engine RPM at high speed but lower torque. Higher gears will be faster on acceleration and have higher engine RPM at high speeds but will have way better torque.

but try this

http://www.csgnetwork.com/gearratcalc.html

 

AutoZone has 2 sensors for the truck, 1 is in the transmission and 1 is in the rear axle?? any ideas on which I should try first?

 

You need the one in the rear axle, like the one in the picture on the first page.

 

X2

 

Just for future reference, my speedo was bouncing around also. Had the sensor in the trans replaced, and the vss. Still bouncing. Took it to a electrical mechanic and said my instrument cluster was bad. Replaced the cluster and now works perfectly. He said that the vss sends the signal to the computer in an "analog" format. The computer than converts it to a "digital" format so the cluster can read it and show the correct speed. Just FYI.