Check engine light, speedometer, transmission, Toyota Solara, P0500?

It does sound like the VSS is the culprit. If the signal isn't accurate, the speedo will just do what it's told. BUT, it should also be sending bad information to the fuel injection computer. Drivability doesn't always suffer, but there should be related symptoms. If the VSS isn't bad, but the speedo is, the labor getting it out of the dash is what is driving up the cost.

It never hurts to have them itemize the bill to understand exactly whats up, and give a warranty on the work.

Changing a VSS out mechanically is a low tech deal, and a good one could be had from the wrecking yard. I'd shop around and check prices, sometimes new from a local NAPA is cheaper.The computer probably holds the odometer reading on that one, so changing the VSS amounts to unplugging it, removing the bolt that holds it, and checking that the new one has a gear on the end with the same tooth count and color. Your local library has auto repair books that will show you how. It's a lot easier deal than the old cable.

I would also check the trans fluid, as it wasn't mentioned that you had - be sure it's up to full.

I'm not sure that the speedometer runs off the VSS. The sensor being bad would confuse the transmission computer and cause shifting problems. Make sure the dealer uses their scanner to read both of the speed sensors on a test drive. There is an input and output speed sensor. I would assume that they already checked the ATF level.

Because of the speedometer acting up I would check the wiring loom connectors for problems and check for signs of mice chewing on the wires on top of the transmission. If there are seed and nut shells it's a good sign of varmint problems.

call a transmission shop tell them the code # and ask them for a price get it in writing or print out and call around for prices . you should not drive it be cause it could lead to transmission failure. if it does it will cost you some serious $$$$$$$

get the code and post it on this question