Increasing the P and D too high will increase oscillation. over 3000-4000 is very high in settings.
You didn't mention what the L (loop) parameter is but this is a important parameter that needs to be set at the start of tuning. L would be between 3 and 6 for your size motor.
Try P800 D1600 and adjust L for most stable. Then increase D to no more than 3000.
How stiff the motor should be, depends on encoder resolution and whats needed. Is your motor a 4 pole or 2 pole ? A 4 pole will be stiffer. All motors will oscillate if gains are too high.
Don't get carried away. Tune it moderate, run it, and then see if you need it tighter.
What is the Powersupply voltage ? What is the motor rated voltage ?
Like HO says though, you can't have any play between motor and encoder or its very hard to tune. But there is a hysterysis command (h) in the vewer versions that can create a dead band for overcoming this.
The firmware version 2.2 is a few years old. Most of the improvements since are for current control and drive protection, but PID tuning hasn't changed.
Are your drives ones with a socketed cpu chip, of are they surface mount ?
Larry K
Manufacturer of CNC routers and Viper Servo Drives
www.LarkenCNC.com and www.Viperservo.com