I also see in your xml you have the X Step and Dir pins as low active but Y and Z have only the Step pin low active, might be worth setting all low active. You will need to go into Homing and Limits and reverse the Y and Z so it continues to go the correct way.
 One other thing is you may want to try a pulse width of 2, thats on the motor tuning page.

What kind of motors and drives do you have?
Hood

I will give that a try tomorrow.

Thank-you

Tried the pulse change and to no avail.

I have servo motors and gecko 320 drives.

Could there be noise throwing this axis off and if so how do I check it.
I noticed once my part is cut and returns to work coords xo,yo If I run the program again it is run further in the negative direction about 1/8 " and woud suspect if I ran it a 3rd time it would move it 1/4" further from original run in the y axis.  Is this a clue to whats amiss?

Ah ok I was thinking you had stepper motors. Servos are closed loop and if the Geckos are not within 128 counts then they will fault, how far that is will depend on the line count of your encoders and pitch of ballscrews but I think it unikely that will be anything aproaching 1/4"
 Sounds like it is a hardware problem, have you tried swapping the X and Y drives around?
Hood

I have mathematically set the steps per based on pitch, ppr etc.  so I know thats on.  If this is a hardware problem what can I check?
I have tightened the belt from motor to ball screw and all other loose components.
I have not swapped the x y out but I guess I could.
Very frustrating the it does not home to work coordinates  of y0.

Swapping the drive out would be the first thing I would do, if the problem moves to the X then the drive is the problem.
 Swapping the motors would be another thing to try but obviously nott such a quick swap.
 Do you have a breakout board? Could be that it is the problem, maybe swapping pins for the Y would help also.

Hood

I got it!!!  There was dust on the encoder.    I noticed a noise every revolution at the same spot.  The motor turned freely once I would fault the drives.  But under signal it made a noise.  Blew out the dust and voila!

I do have a concern on running circles.  It seems the larger the diameter the more true it looks and measures.  But once I am down to 1" or less it looks a bit distored.  Is there something in motor tuning in Mach I can check?

That could be backlash, the smaller the circle the worse the backlash is going to make it look as the backlash is a bigger % of the motion than it would be in a bigger circle.
Hood

What do I do about backlash?

First check that it is backlash,
if it is then you can either live with it
try and eliminate by checking all pulleys are tight, mounts for bearings are tight, ballscrews are adjusted if they have adjustment etc
Last resort is use the backlash comp in Mach

Hood