I thought surely by now I would have posted that I had solved the problem. A few days ago I made a 500 km trip and sure enough the alternator quits. I noticed at one point that the power window was operating more slowly than usual. However, I thought nothing of it. After another hour I was thinking hmm, shouldn't the AC be blowing harder on third speed? Again I cast the thought aside and kept on trucking. Everything worked fine and 45 minutes later when I pulled into my grandparents driveway I noticed that the battery light was on. Instantly it all made sense. I shut it off, took the voltage meter and the battery tested at 12.2 volts. With engine running it tested at 11.6 volts. Installed new alternator and belt (the old one was getting brittle and squealing at every start up) and we're back to 14.4 volts engine running. As for the OD light flashing, it's still the same story.

Sent from Nexus 4. IB AutoGroup

 

I had the same issue on my 97 for close to a year. I bought i think 3 speed sensors for the tailshaft and replaced the one on the rear end diff housing. I can't remember if i replaced the alternator on that truck of if it was 98. If it was the 98, than it makes me wonder if that was the issue the whole time.

 

The answer to your WHY question is this right from Ford work shop info manual..
The 503 code says the following; Indicates poor or >>>noisy<<< VSS performance.
The 1500 code DTC is set when the VSS fault ""interferes"" with other OBDII tests such as the cat efficiency monitor, EVAP monitor or Ox sensor monitors..
Notice that all these are part of the harness the VSS leads reside in and in the same general area.
You can see the possible interference if the noise is high enough or crossed with other leads in the harness to induce noise on leads that are many feet long overall from the EVAP at the rear of the fuel tank all the way to the PCM at the fire wall.
I know it's tough but it's there somewhere.
Inspect the harness all the way from front to rear for rub through, intermittent grounding or crosses..
The problem is this is a software detected fault in a dynamic operation as a cause and effect issue with two codes showing it up to help with finding the possible cause. Put very high value in what the PCM tells you is happening. You have no other way to approach it.
Good luck.

 

does this blinking light and codes cause any driveability issues?

 

What is the associated code?
The computer monitors all the electric functions.
Each function has a specific job.
There are nearly 60 codes that can be set for malfunctions.
For example if the Electronic Pressure Control valve were to be in trouble and not open the trans may not work at all or could be slow operating and cause shifting issues or stuck open and cause harshness.
Another example is the transmission temperature sensor detects over heating from some cause or if open could cause OD to lock out.
Good luck..

 

I dont have a blinking OD light, I did when I owned my 97 10 years ago. I never really experienced any driveability issues, atleast I dont think I did. I had replaced every vss sensor possible and tried to trace the wires from the vss behind the transfer case to the poitn where I couldn't see it. I never found any worn sections of wire. I just ended up putting electrical tape over the light.