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Put 100 miles on the car and a few startups and it keeps coming back. I made sure the wheel did not get rotated during the install(tied it in position) but I noticed when going straight down the road the steering wheel is rotated slightly to the right. Can it be off an inch and that throw the code? Will disconnecting and realigning the wheels/steering wheel cure the problem?
Yes, the steering wheel off center will in fact cause this to happen. You need an alignment first off.
Should I try and get the steering wheel/tires straight first and try and get this warning gone before I worry about getting an alignment? Or will I need to get an alignment in order to get the active handling system to be happy again?
You have no way of knowing if the STEERING WHEEL is actually at ZERO. Knowing that is important because the Steering Wheel Position Sensor (SWPS) "MUST" be at zero before you can get a proper alignment. The steering wheel can be at ZERO but the sensor may be at a value other than zero.
At this point, you will not know if the steering wheel is off to the LEFT or RIGHT and by how much so, that prevents you from just guessing. theres also a spring inside the steering column. If the steering wheel is rotated too far in either direction too far, you will break that spring. The GM Tech II can display the SWPS value and allow you to correct that value.
Get the SWPS issue corrected and then resolve the alignment.