Mcp autopilot failure in one mode only

[MickG0105]

I recently read a 2011 incident report where the crew on a B737-300 experienced arcing around the First Officer's windshield followed by a particularly interesting partial failure of the MCP autopilot. It was particularly interesting in that it failed in the vertical mode but not the lateral mode.

According to the report:
After setting the assigned altitude, I attempted to go into Vertical Speed mode on the MCP, however, the window did not illuminate when I thumbed the wheel to start our descent. I then selected Level Change to no avail and then VNAV. I initiated the descent in CWS Pitch mode. ... We both began looking around and that's when I noticed there was some electrical arcing on the inside of my forward windscreen just to the left of the fold down handle. ... Descending, the arcing would intensify and then dissipate. During the descent, the only functions of the MCP that would work were the heading knob and the course selector for the HSI ...

The autopilot was almost certainly an old Sperry SP-300.

I was wondering if anyone has experienced anything similar in any other airplane type with any of the newer MCP autopilots such as the Rockwell Collins AFDS-770?

[Reveal1]

speed trim fail maybe? ..due maybe a seizure engine? just guessing , in this case N1 drops instantanly < than 5% with N2> than 50%
in this case you lose the vertical mode (v/s, Vnav, Lvl Chg) as spd lim shown on PFD.

[MickG0105]

speed trim fail maybe? ..due maybe a seizure engine? just guessing , in this case N1 drops instantanly < than 5% with N2> than 50%
in this case you lose the vertical mode (v/s, Vnav, Lvl Chg) as spd lim shown on PFD.
There were no engine related issues mentioned in the incident report (NASA's ASRS ACN: 948442) just the partial failure of the MCP subsequent to windshield arcing.