Ok I think I have my mill setup right. My step motors are Vexta PK268M-02a which are 400 steps for 1 rev. My lead screw is 1/2-20 and my controller board (xylotex) is set at 1/8 step. So if I have this right, I would take 20 x 400 = 8000 x 8 =64000.   Does that sound right? and if so do I need to have it that fine or should I do 1/4 or 1/2 step for the board? 

Yes calcs are correct.

It depends on the rapid speed you need and what kernel you can set Mach to reliably. If you keep the kernel at 25KHz the max rapid will be 23Inch per min, if you go to 45KHz it would be 42IPM
45KHz is probably the best you can expect reliably, some computers can do better. If you need more than 42IPM then drop down to 1/4 step and that will give you 84IPM max.

Hood