On an XM that I owned, this behaviour was traced to a faulty o ring of one of the rear struts. Because the high pressure o ring seal, the one closest to the suspension sphere on the suspension piston was not sealing, high pressure suspension fluid was passing straight to the leakage return tube and back to the reservoir. That means it's easy to diagnose, check the return flow to the reservoir by looking in the top of the reservoir. Any significant flow indicates a problem. The fluid leaks and the suspension drops, the height sensor caused high pressure feed to the rear spheres and the suspension goes up, leakage drops it etc. it was cycling up and down at about 3 cycles per minute.