It sounds like the potentiometer is going bad -- assuming that it is a 270 degree wheel instead of a 360 degree wheel.
If you go into Self-Test mode, you can test the whole steering circuit (labeled "handle") as described on pg. 9 of the
Operating Manual.
Not sure of the operating voltage or if it is connected to pin 1 or 3 on the steering potentiometer.

Test the voltage between pins 1 and 2 or 2 and 3 to see if you get a smooth range of values as you turn the wheel.
Schematics available
here, but I didn't notice the steering circuit when I thumbed through it.
You can also unplug the steering panel to test the potentiometer separately from the game board.
See if it gives a smooth range of resistance values as the wheel is turned.
** As always, ensure the potentiometer is unpowered when measuring resistance so you don't fry your meter. **
Scott