Yes you do need the encoder module for rigid tapping, in reality with the IP-A it should not be required but I think the reason I was given at the time was they had standardised the plugins and thus it was needed. Maybe in the future (Mach4) it will not be required but ......
Talking of rigid tapping, it is very nice indeed with the CSMIO, previously it was good but you had a few things you needed in addition to the M84 line, now all you need is the start position and the M84 line. Here is a video I did just the last day showing rigid tapping.
http://www.youtube.com/watch?v=WUO3pSb0JwQRegarding spindle orientation, that can be handled in the plugin, there is a section there that allows you to stop the spindle at any position, not sure how well it works as I have not tried as my toolchange requires that I am spinning at about 200rpm rather than having to stop.
You wont get encoder cables etc with the drives, you will have to make them up yourself, I would imagine you will have them already if you have the rest of the stuff fro the machines. You may have to cut off an end and wire to whatever plug the drive requires.
Power supply will depend on the drive, for example all my servo drives take mains electricity (240v single or 415v three phase, depending on the drive) Lower end drives tend to require you have a power supply and the power supply will usually have to be DC of approx the voltage you wish to output to the motors.
CSMIO needs a small 24v DC supply.
Hood