Hi All;
I've just finished an ls3 swap into a 63 c2. The LS backfiring is associated with the DFCO settings in the tune. One thing I learned was that the ECU has to getting a valid speed reading from the transmission in order for the DFCO parameters to alter the fuel cut-off characteristics (and hence the backfiring upon decel or throttle lift between shifts).
On an E38 LS3 ECU, it turns out that if the ECU came out of an automatic car ... it will not read the transmission speed on pins 71 & 72 .... it gets speed across the bus from the trans computer (which you probably aren't using in a c2 swap). This can't be altered with tuning sw ...I.e. HPTuners. Uou have to an E38 ecu out of a car that came from the factory with a standard.
Once the ecu sees vehicle speed properly, you can then play with the other dfco parameters in the tune to stub out the backfiring. I reduced mine to a very light bit of burbling. I'm still playing with it to get it to where I want it.
Cheers
Eboch