check if the problem is the fact you have set 9700 baud rate on your sketch while the commonly used 9600 is supported from arduino IDE.
I slightly modified your code and it works for me. Check if this works for you:
#define Pin 3
#define Source 5
unsigned long pwm_value;
void setup() {
pinMode(Source,OUTPUT);
pinMode(Pin, INPUT);
Serial.begin(9600);
analogWrite(Source,600500);
}
void loop() {
pwm_value = pulseIn(Pin, HIGH);
Serial.println(pwm_value);
delay(100);
}
when you connect pin3 with pin 5 you should get a consistent value on Serial(=974=967).
About getting signal on floating pins
Getting a signal on a floating pin is normal. When you have a cable attached it acts like an antenna. When you touch it, you are the antenna!