Bob, thanks for the report. My observation is very different. With K3-S PWR set to 100 watts, I see erratic display on my P3 with TX monitor while the K3-S RF output on display bounces between full scale and 50% full scale.
I tried setting the tone at 500, 1500 and 2500 Hertz and all behave the same.
Interestingly, when I key transmitter using the WSJT-X TUNE button, the K3-S RF output is steady. But when I send CQ or any other message, the RF output is erratic. So I opened the PC Volume Mixer to observe the indicators of volume level and WSJY-X.
Using TUNE, the CODEC speaker is steady.
When sending a CQ message, the volume (green indicator) bounces while K3-S RF display bounces
Wonder if my problem is in the PC audio oscillator? Don't think so because earlier I ran a cable from PC earphones jack to K3-S LINE IN jack and found audio was stable.