Dave, I have had a look at the documentation for Garrecht transponders in general(not knowing which transponder model you have), and there is nothing to indicate that they use anything other than the internal Alticoder, or an external Alticoder for the VT-02 and VT-2000. For these two there are just four modes:
Possible values:
int-25ft, uses the internal pressure sensor for alticoding with 25ft resolution
int-100ft, uses the internal pressure sensor for alticoding with 100ft resolution (not recommended anymore),
ext-25ft, uses the data provided by an external alticoder with 25ft resolution. Never use this setting, if you don't know exactly, which resolution the alticoder connected to the VT-02 provides.
ext-100ft, uses the data provided by an external alticoding with 100ft resolution. This is the default setting for parallel alticoders as used in former KT-76 / KT-76A/ KT-76C installations.
The ADSB settings make no mention of the altitude.
I would switch to the internal Alticoder?