I've been through this exact situation with a Cateye Velo 7 and it did very similar things. I'd be riding along at 30 km/h and the speedo would flash to 45 or 60 and rarely 90, and I never saw it but the MAX SPEED was at 120 km/h.
The curious thing about those numbers is they're some multiple of the speed I was travelling.
Firstly, start by checking the magnet. Its probably fine, but this is far and away the easiest thing to check. Most sensors have a line that is the middle of the sensor, so that's where the wheel magnet should be centered.
Otherwise, your description tells me the wiring is mostly working but the head unit is getting multiple signals. The possible causes here are
- a break in the conductor inside the wire
- an intermittent connection to the head unit inside the socket on your bars
- poor quality soldering at either end of the wire - a cold joint
- a faulty sensor
- extra magnets on your wheels.
The extra pulses mean that something is blipping more than once per wheel rotation. I'm not sure exactly how many blips the headunit requires to calculate a speed, but from manual testing its at least 3, maybe 4.
If you think the head unit might be acting weird on its own, test it out of the harness using anything metallic to short the two pads on the back. (note the pictured connectors are dirty and need a clean.)
Rapid shorting of these pinheads should make the computer see wheel rotations, and give an approximate speed.
You can troubleshoot the harness too - connect a continuity sensor (either a multimeter with a beeper, or an ohmmetermm or a small lightbulb and battery) to the pads on the receiver socket, the plastic holder that stays clamped to your bars.
The reading should be infinite ohms, which means no connection.
Move a magnet past the sensor, and this will close the internal reed switch, which will make your meter beep, or the ohmmeter read a number, probably about 1 ohm. This should go open circuit again when the magnet is removed.
If this doesn't work, examine the wire for any bumps or sharp folds or abrasions. Any should be repaired and then continue troubleshooting.
Down at the sensor, if you can pop the unit open and see the reed switch then do so. There may be fasteners or clips or perhaps simple friction holds it shut. In mine, there was a small black plastic version of a "guttering downpipe standoff" which clipped over two plastic studs and held a tiny circuit board in place.
I did not get a photo sadly, but the only component on the board was a through-hole reed switch and two holes for the wire to attach. My reed switch was faulty, so I replaced it with a $2.50 item from the local electronics supplier and it worked fine. A dab of solder and some glue were the only other parts used.
Note when reassembling, use glue to provide sealing from moisture, and to reinforce where the wires come out of plastic - generally these are prone to breaking here.
Use creative wrapping around a brake cable or similar to get your wire up to the handlebars while supported.
I do not think its your battery, because the screen will start going dim when the battery needs replacing.
Most of the wired cateyes use the same mount and sensor, which is available as a spare part. Downside of this is the spare part is $18NZ from Wiggle, whereas the whole unit is only $22. For the difference I'd rather have a spare headunit for $4.