In OEM applications the PCM receives both a 40 PPR and 4 PPR signal.

The PCM uses the 40 PPR signal for tranny controls on pin F12. It uses the 4 PPR on F13 for speed and other speed reference functions.

You can use the 2 PPR JTR VSS to the PCM, but it will read low, and can cause some control issues.

In my case I am using a 4L60E, and found out the hard way that I had to use the 40 PPR tone ring and DRAC. For non E tranny applications it would be best to use a 4 PPR, a VSS buffer may be need to condition the signal.

I believe the flag to change from Optical (square wave) to Magnetic (Sine Wave) is called "Output Speed Not from DRAC" in most XDFs.