PA-28 instructor pilot reported an instrument malfunction while performing an instrument approach in IMC weather; then also received an altitude warning. The pilot performed a missed approach and diverted to another airport and landed safely in VFR weather.

Narrative

I conducted an instructional flight in a complex airplane; acting as PIC/CFI (I'm CFI/CFII/MEI). The aircraft is equipped with a GNS430W connected to a Garmin GPS/VOR/LOC/Glideslope indicator (like GI-106A or similar). We took off in VMC conditions. On the return flight; the weather at our home airport turned IMC - with a ceiling of less than 700 ft. and cloud tops at 1700 ft. (the TAF during the pre-takeoff briefing forecasted marginal VMC). As a CFII and instrument current; and with the student being PPL/IR and instrument current; we decided to pick up IFR clearance in the air and fly an LPV approach to the destination in IMC conditions. During the approach; the GNS 430W indicated a green LPV symbol (approach mode); and the GPS/Glide indicator showed the GPS symbol; BOTH (LOC; GLIDE) WARNING FLAGS NOT PRESENT; with both needles indicating less than 1 dot deflection - LCDI; VCDI. Before the FAF; I realized we were below the FAF crossing altitude with the VCDI indicating sharply on glide and all instruments indicating a valid VCDI signal (430W in LPV mode; no warning flags present). I recognized a VCDI instrument failure and downgraded the approach to a non-precision with step-down fixes. I did not inform ATC about the downgrade while descending to the next step-down fix. We received an altitude alert; started to climb in the direction of the MAP; and after breaking through the top of the cloud (still before the MAP); canceled IFR and landed in VFR conditions at a nearby VMC airport. After landing; I recycled the power on the GNS430 to reach the 'instrument panel self-test page.' The page indicated LCDI and VCDI deflections; while the GI indicator showed LCDI deflection and VCDI centered. After a minute or so; the VCDI needle rapidly jumped to the expected position. I assume the VCDI indicator was mechanically jammed. The same issue (VCDI centered with no error flags while not on glide) occurred to me approximately 4 months ago with a different airplane; a GTN650 receiver; but the same type of Garmin CI-XXX indicator on an ILS approach. The common point for both events is that the involved planes do not fly frequently; I flew both planes after a relative log period (a month or so) of sitting on the ground. Lesson learned: it is important to complete an instrument panel check; even if departing VFR and not expecting VMC conditions.