Absolutely. I've had an instrument failure (invalid attitude indication) cause an autopilot issue that put the aircraft in an upset state in seconds. From there

Absolutely. I've had an instrument failure (invalid attitude indication) cause an autopilot issue that put the aircraft in an upset state in seconds. From there you're manually recovering based on limited data. Fortunately this is a key part of training and unlike the autopilot a human pilot knows to look at the backup instruments and make a judgement on what data is correct. But that judgement is very hard to code into an automated system. Because there is also a bit of trial and error involved. If indications don't follow your inputs, you're going to assume those indications are wrong and put more weight on the others.