Hi Richard,
I agree with you, I think the problem lies with those drivers and it looks like a fight you cannot win. It seems that the actual current is set with (what should be a potentiometer) R14 which has been replaced with two resistors. Perhaps bite the bullet and look towards a replacement such as the Gecko G540 (or similar) that way you are guaranteed a high quality product and full back-up service etc.
Spindle on/off is just a matter of connecting a relay - perhaps check out the Gecko site, there is lots of useful information there
http://www.geckodrive.com/support.html Variable spindle speed control is a bit more complicated but it's not rocket science.
Mach is not a 'closed loop' system and my advice is to forget about encoders - I have been using various systems 'open loop' for over 10 years now and I don't get lost steps so there should be no reason your CNC should not work perfectly once it is all set-up correctly with the right components.
Hope this helps.
Tweakie.