after reading this:
http://www.buildlog.net/cnc_laser/mach_laser_power.html I think i see some of my problem. I had read this when i built my motor controlled and used the settings listed.
The big problem i see is how i have the pulleys set up. he has it set for 0min and 100max and for PWm this equates to off and 100% power!! that's what i have wrong. with the pulleys set to 5000 and 30,000 the PWM controller doesn't know what to do. which is why it always defaults to the min PWM i have set in the spindle set up! AH HA!
I will give these settings a try!