So you're using the single fire adaptor & no needle bounce? Mine bounces most of the time & occasionally is steady. It's far from unusable - just annoying. I had the adaptor behind the coil cover & then moved it away from the coil to see if that made any difference but it didn't. Could they have recently developed an adaptor that works properly?
Mine is a 2" tacho mounted between the bars and the instrument cowl. I'd have thought the 3" & 2" electronics would be identical.
If it bounces only occasionally, I'd check the electrical connections. It sounds like something intermittent.
Initially, I installed it without the adapter. The needle bounced here and there and when it was more or less steady it was showing double the RPMs (or was it half? I can't remember, this was like 3 years ago.. but it was either a half or twice the real RMPs).
Once I plugged in the adapter, it became rock steady and it works exactly as a good tacho should. I also have everything crammed under the ignition cover. I do not believe the location matters -- there should be no interference. If anything is sensitive, it should be (and is) shielded.
My electrical skills are likely below-average, but this was a 30 min installation for me...
If I were you, I'd try to double-check the connections in your installation. If nothing helps, call the Baron guys, I'm sure they will help you diagnose it (possibly a faulty adapter?)