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That difference is not because of the larger tire size... I suspect you have a speedometer problem. I would test this by installing a known good gauge cluster and see if the speedometer reads more accurately then.
Likely your new speedometer is also defective. Is the odometer close to being correct? You will lose some percent going to larger tires but not 50%.
The speedometer head is actually a rather complicated bit of electronics that is mostly digital, so there's nothing to adjust or calibrate. It does have a couple of electrolytic capacitors that will fail over time though, and often capacitor replacement is all that is needed.
No code 17.. I did some more testing. The VSS is putting out a pulsing voltage when you turn the wheel. I have continuity from the VSS sensor all the way to the speedo. I also have power and ground to the speedo.. theres only 1 thing it could be right?