Pete:
You accomplished pretty much all of the in-plane troubleshooting I could recommend, including testing operation at the self-test, with a localizer and (and this is the big one) verifying proper operation in OBS mode.
Based upon all of that, we can conclude the following:
1. The indicator's resolver is working properly, and communicating properly with the 430, because you can get the proper indication using OBS mode;
2. The 430 is driving the indicator's left-right needle properly, because you're getting proper indications when flying on a localizer, and because you are getting the proper indications on the self-test at startup.
Based upon the foregoing, I sincerely doubt the problem could reside in your GI106 indicator, and it probably is not in a connector, either; rather, there is a problem internal to the 430 with processing the signal from the VOR.
A couple of more stupid questions, but worth asking:
When you tune in a VOR station (which you have done, including listening to the identifier), does the NAV flag go out of you? And, you're not tuned in to a VOR, but the 430 is in VLOC mode, does the NAV Flag show?