That's a different OBS functionality to what I have seen previously but I have never flown behind a GNSx30 and actually done something nontrivial with it.
Normally, you would specify TO for the OBS value, because that is how it is used. You use the OBS function to fly
to the "DCT" waypoint.
It's also best to keep the procedure simple. For example a hold may be defined on a VOR radial, and that radial will obviously be
from the VOR (being a "radial"
). But I would still use the TO mode. Especially as you are more than likely to be flying to the holding fix from some random place, not from overhead the VOR.
As soon as I set the autopilot to NAV mode, it will perform its standard intercepts to center the deviation bar and that is not always what you want to do when you're rather close to the fix. So I haven't found a good way to actually use the OBS/GPS information to drive the AP in a sensible way.
I wonder if perhaps you are seeing the famous "Honeywell functionality". I discovered this right away in 2002 but everybody denied it.
Basically, if tracking a GPS track, you must not press NAV unless the HSI bar deviation is at least 3 divisions (3/5 of full scale). If you fail to obey this, the AP turns onto the current CP track and then gradually adjusts the heading to reduce the error. Usually, this is really crap. There are two workarounds. One is to do the intercept in HDG mode and switch to NAV only when right on track (but even then the AP usually does some wiggles and confuses radar ATC) and the other one is to set the GPS sensitivity from the enroute default of 5nm FS to 1nm FS or even 0.3nm FS; this obviously increases the HSI deflection...