I have mine mounted upside down under the inspection hatch in my Europa baggage bay behind the seats, and it works fine.
Not true, and that is not in the manual. I suspect there's a different interpretation of terminology at play here. You should avoid ground loops, not create them. Ground (pin 12 on the 261) should be connected to the same common ground you used for your other avionics, usually the audio panel or intercom.The manual suggests it’s a good idea to create ground loops.
Is the SV transponder not quite connected to the ground pin? I installed mine without a separate tray ground because i tested case continuity to ground via the pin.