I have installed an air drill on my router next to my spindle, using the same z plate.  I'm not too familiar with mach3.  How would one go about configuring mach3 to run it.  I need some direction.  Thanks in advanced

install a solenoid valve on the air line of the drill and a relay to drive the valve in your control box. take one output from your breakout board to drive the realy and configure mach in the  port and pins. on a router you probably don't use the coolant output. if you use this output to drive your drill when using the m fonction for coolant the drill will turn on.

Just to be a little more clear, I already have the drill installed and running.  The question I have, is how and where to assign an offset to the drill, so when I'm running a drilling operation mach knows where the bit is in the x and y.

use G54 for your main spindle and G55 for the drill. in your program when you refer to g54 at x0,y0 for the router, it will be the same physical spot as g55 x0,y0 for the drill

Can you explain a little further.  I am pretty new at all of this.  Could someone possibly show me some sample code on what you are talking about?

when in mach 3, go to the offset page. position your router at any point on your table that you want it to be the zero X and Y of your part , then zero x and y at the top right corner of the window (mach3 ver 3.042 your layout maybe different if using another version).  when this is done, position your drill at the exact same spot your router was, then click FIXTURE2(g55), and zero x and z. now if you click on fixture 1 and ask your system to go to x and y zero your router will be centered at part zero and if you click fixture 2 your drill will be centered over your part zero. at the beginning of your program, use G54 code if you wanr to use the router or G55 if you want to use the drill. you can also switch offset in the middle of a program for example if you want to drill some holes followed by cutting a contour.