@John Collins, thank you for your reply. You were absolutely correct. Unfortunately the avionics shop blamed the radio after "diagnosing" it. Turns out, the radio was - and is - perfectly fine, and a $125 replacement KI-208 indicator off of eBay took care of the entire problem.
Apologies for reviving this old thread but experiencing a similar situation.
@k9medic, were you ever able to determine the part why the CDI would display LOC indication but not VOR? In other words, I am interested in the lateral display (not the glide slope). Did it turn out to be a radio...