An up and down nod with exaggerated movement, i.e. the head going higher up and lower down than a normal nod, would be more in keeping with the “north and south” description

What you say makes sense, Dgeigh. Also, I agree your new example is not consonant with my interpretation.

Of course, it is quite possible that the expression "north and south nod" has a separate, coded meaning for the military, or for General Garner who is quoted in the story, in particular.