Seeing as you have an NP241 and are changing your instruments out anyways, I'd tend to say that switching to a tone ring VSS is probably your best option no matter how you look at it.
Right now, as you probably know, you have an optical speed sensor that takes a reading off the two spinning blades in your mechanical speedometer head which produces the 2000 PPM (pulse per mile) signal used by your cruise control and your ECM. The DRAC will completely replace your current optical speed sensor, giving you much better reliability and more importantly, the ability to re-calibrate at will.
I'll start off by covering the swap from a speedometer gear drive assembly to a tone ring assembly in the transfer case.
You will need to remove your rear drive shaft, and both the long nose cone and the shorter cover which contains the output shaft bearing and also your driven speedometer gear. To remove it, you'll need only basic hand tools including a socket set, and a pair of HD snap ring pliers. The bigger nose cone simply un-bolts and pops off the back of the shorter bearing retaining cover. I had to use a rubber mallet to break it free. Before you can remove the shorter cover, you will need to remove the driven speedometer gear from it. Then it too simply un-bolts and pops off. You'll see the speedometer drive gear is retained by a large & thick snap ring. My pliers were too wussy to get it off, so I had to pry it off with a couple flat blade screw drivers. Once it is off, you can just slip the drive gear off the output shaft.
Reassembly is the exact opposite, except you need to replace the drive gear with a 40 tooth tone ring and you must replace the bearing retainer cover with one that is threaded for a VSS. Midaswell replace the output shaft seal while you have the nose cone off too.
Electrical is pretty straight forward. You'll need to supply the DRAC with an ignition power feed, and a solid ground. To supply the DRAC with the VSS signal, you simply run two wires down to the VSS and terminate them directly to the DRAC (AC signal, polarity does not matter). The DRAC then has several outputs on it that can be used by various systems on your truck including several 2000 PPM signals to be used by the ECM and your cruise control, several 4000 PPM signals to be used by your new Autometer speedometer / newer cruise control systems, and finally a 128 000 PPM signal to be used by the ABS system on so equipped trucks. Connecting the DRAC to each device entails simply running a single signal wire to each device's appropriate terminal.
Now, the really handy part about the DRAC is the ability to very accurately calibrate them to match any tire / gearing combination. I'll let the following website describe it much better than I can. Also note that there are a couple different types of DRACs used throughout the years. I found it easiest to install the DIP switches on the older 90/91 version of it vs having to install two DIP switch assemblies on the newer DRACs.
http://www.tbichips.com/drac/
Finally, I've attached a pin out for the DRAC modules to this thread that I made up a while back to help out with the wiring. Your ECM uses pin A10 to take a 2000 PPM signal from the DRAC, and is brown in color on TBI trucks. You should be able to find that wire hanging off the back of your current optical speed sensor. I believe the cruise control wire is yellow, and it also uses a 2000 PPM signal in your year of truck.
Keep in mind that there are conflicting diagrams for which pin is which signal on the DRAC. You'll know right away, however, if you run a 4000k signal to your cruise control. It will be very lurchy (on and off the throttle all the time) and will activate below 25 mph / won't activate over 55 mph. If you run a 2k signal to your speedometer, it will read 1/2 speed, if you run a 4k signal to your ECM, it will read double speed when you scan it. The power, ground and two VSS pins I know are correct. I believe I have my speedometer connected to the very top 4k signal pin, and it works fine.
Good luck, and let me know if there is anything else I can help with.
