ACFT ALTDEV AND OFF COURSE DUE TO FMC CONFUSION.

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WE DEPARTED DCA RWY 36 ENRTE TO ORD. I WAS HAND FLYING THE AIRPLANE. WE WERE CLRED TO CLB TO 17000 FT MSL ON A HDG TO JOIN J149 NEAR AML VOR. FO ATTEMPTED TO PROGRAM THE FMC FOR LNAV INTERCEPT OF AIRWAY. HE HAD PROB GETTING PROPER COURSE SET UP. MY ATTN WAS DIVERTED TO MONITOR HIS ACTIVITY. WE CLBED TO APPROX 17450 FT MSL BEFORE DSNDING BACK TO 17000 FT MSL. AT NO TIME DID ATC COMMENT ON OUR ALT. SHORTLY; WE WERE CLRED TO CONTINUE OUR CLB. FO ENDED UP WITH WRONG COURSE FOR J149 BY APPROX 4 DEGS. ATC NOTIFIED US THAT WE WERE ABOUT 6 MI S OF AIRWAY. ATC THEN CLRED US DIRECT TO GEFFS INTXN. AT NO TIME DID ATC INDICATE THAT THERE WAS ANY TFC CONFLICT. CAUSE OF PROBS: AS CAPT; I ACCEPT FULL RESPONSIBILITY FOR THE DEVS. WHEN I WAS AWARE THAT THE FO WAS HAVING A PROB; I SHOULD HAVE PUT THE AUTOPLT ON AT THAT TIME -- NO ALT OVERSHOOT WOULD HAVE OCCURRED. AS FOR THE RTE PROB; I SHOULD HAVE USED RAW DATA VOR NAV PROCS UNTIL WE SORTED OUT THE FMC PROB. I RELIED TOO HEAVILY ON THE FANCY STUFF. I ALSO GAVE THE FO MORE CREDIT THAN I SHOULD HAVE FOR BEING ABLE TO SET UP THE CORRECT COURSE.