two things are on G42.
First when you generate a g41 or g42 you do not attach it to its own line number, See attached.

Second when i run the attached file the leadin does not work right.  Line 60 and 65 seem to combine instead of 60 completing before 65 starts.  Not a LZ problem but very strange.  Just loaded 1.90.65 this morning.  Probably in Mach3 not LZ

You need to specify the tool size on the G42 line, using either the tool #:

G42 D1
 for tool #1

or the tool radius
G42 P0.25
for a 1/2" tool

The comp is applied while traveling from the location prior to the G42 to the location in the line after the G42, which is considered the lead-in move.
If you folow the rules, it works fine. I haven't seen any problems.

I had not seen a problem either until lately. 
The gcode file as processed by LZ works except for appearing to combine lines 60 and  65 into one move.

I had often wondered why there was nothing in the cgode file to reference tool number or radius but the offsets look good in the toolpath display.  In  LZ I specificed the tool number (#1) of the cutter and have diameters loaded into M3.
If your testing tool #1 has a diameter of .250.