update,
if i set the z inputs to be active low (which is backwards to how they are wired) the L.E.D.'s are lit in the diagnostics screen as expected. but the strange thing is now i can clear the estop and jog the machine. yes i typed that right, i can clear the estop and jog the machine with 3 led's lit in the diagnostics page i attached a video of this happening. just a note this a slow jog, the feed rate gets locked to 80ipm. even when jogging i cant get a rapid speed (which is 450-550ipm). haven't tried to run a code with this error.
The the video is at the buildyourcnc.com/forum, had to move here because i cant seem to get an iphone video which is a .mov file, to post on the artsoft mach 3 forum. Here is the link
http://www.buildyourtools.com/forums/index.php?f=9&t=1554&p=7114&rb_v=viewtopic#p7114