You can either specify a tool number from the table, by using G42 D1 where D is the tool #, or specify the tool radius by using G42 P0.125 where P is the tool radius. With advanced comp, you need to use a lead-in move where the comp is applied. I also like to use a lead out move, because that's how the control on our router at work works. I also use the leadin move to ramp into the cut. Here's an example. Load it into Mach3 and see what it does.
G40
G0 Z0.1250
G0 X-0.5000 Y-0.5000 Z0.1250
G1 X-0.5000 Y-0.5000 Z0.0000 F50
G42P0.125
G1 X-0.2500 Y0.0000 Z-0.2500 F150
G1 X2.0000 Y0.0000 Z-0.2500
G1 X2.0000 Y2.0000 Z-0.2500
G1 X0.0000 Y2.0000 Z-0.2500
G1 X0.0000 Y-0.2500 Z-0.2500
G40
G1 X-0.2500 Y-0.2500 Z-0.2500
G0 X-0.2500 Y-0.2500 Z0.1250