I'm slowly but gradually hammering area nav into shape. I have now modeled three independent TACAN receivers all with their characteristics, and they all show different bearing and distance to the beacon based on that.
The software then either merges them into a composite signal to cancel errors, or, if one of them (as in the example TAC2) deviates from the other two beyond tolerances, it gets voted out as faulty and the composite signal is only created by the other two.
Alternatively, it is possible to manually de-select any of the three data streams (or switch off the receiver). If all three differ from each other by equal amounts, they're marked as being in a dilemma and the crew must make a selection which one to use manually.
The resulting TACAN composite information is then used to constrain state vector drift as maintained by the IMUs, taking into account the distance-dependence of the expected accuracy of TACAN transmitters.
If the selected receivers happen to be the faulty ones of course, that means the state vector is driven off by incorporating the TACAN data...
Since that's possibly a handful to deal with for the casual user, I guess I'll just add one detail level to the simulation of navigation, then we have
1) perfect - the state vector known to GNC always is simulated truth
2) perfect instruments - the state vector drifts unless constrained by the navigation instruments, but the instruments always work
3) realistic - instruments may experience faults and simply show wrong and the crew needs to deal with this