Barry, that's the one. It all seems correct, but i think your problem is you are using two length offsets.
One is in the tool table and one is on the line
G17 G20 G40 G54 G64 G90 G43
(Spot Bearing Center Using 11/32 Drill Tool2)
T2 M6
G43H2(0.34375)
H2 is adding another 2" to the offset
I use this format at the beginning of a toolchange
N160 M08
N170 M03
N180 G43 H0 D0
At the end of using that tool i have a G49 to cancel the tool offset
Then i enable it again on the next toolchange
Easy with cam and a working post processor.

I suggest you try the tools manually to make sure the offests are in the correct format as follows
Set tool one in machine zero on a foam/sponge block (Something soft)
Enable tool offset
Change to tool two MOVE Z to zero it should in the correct position as i cant remember if the tools should be neg or positive numbers in the tool table as i am not at the machine and haven't used it for some time.

Repeat/check all other tools.