Having done hours (literally - it's 03:55AM!) more research on this, the KFC225 does support a form of GPS Steering. With the GNS530W in GPS mode it signals to the KFC225 to use the GPS ARINC 429 information to steer with rather than the analog HSI deviation, although it must use analog guidance for GPS approaches - see the link below. The KFC225 effectively can work in an analog or digital mode, and that mode is triggered by a pinout on the GNS530W.
Now, for reasons apparently from the 1990s, when the GNS530W is changed between GPS and VLOC mode, the KFC225 will, IRL, drop back to ROL m