Using the file you posted I had no problem generating code from Lazyturn in diameter mode.
See Pic DIAMETER MODE_HCIR1
Then I ran the gcode file in MacH3 Turn. ( had to edit a few lines because of more than one line number on the same line )
See Pic DIAMETER MODE_HCIR2
Then I backplotted the gcode and copied your drawing to compare the code to the pathing form LazyTurn.
See pic ACAD DXF OVERLAY TO CODE
don't see any options while saving the dxf file about diameter mode
Missunderstanding .....draw your full size full size and just save as a version 12 DXF.
( What i meant was ,some follks for whatever reason will draw half size, then use the diameter / radius option to enlarge it,
and then who knows what mode they are in in Mach3 Turn...you just don't do goofy stuff like that)
The rough pass is in diameter settings and the fine pass is in radius settings (need to be doubled).
I have never seen that and need to fool around to see what you did to accomplish it!

See pic DOUBLE ACAD DXF OVERLAY TO CODE
The problem is that Denford doesn't support the older machines

I don't know what you mean .....
RICH