Graham - and Ditmar
I don't think you need to get too involved in how it all works. The important thing for you is What makes it work. You say it is a 10v dc signal that controls the speed and a relay controls the direction.
If there is easy access to the reversing relay already fitted, then this can be controlled by a second relay in turn controlled by the Mach3 M3 or M4 signal (which would cut out any chance of electrical interference). Ditmar - as far as you are concerned - the same question - what changes your direction now - is it a switch, is it a pushbutton - etc. The simplest way to wire anything up is leave it as it is, and just alter the control - so if you have a switch - fit a relay that closes a switch in it's place. I have my four additional outputs on Mach driving four relays ( via a Darlington array chip) - a single chip that can drive all four relays direct from the computer. These relays are (at the moment) activated by M3 and M4 (to suit my Omron inverter). I am only using two at the moment - the other two are spare possibly for coolant and anything else I want to control.
As far as the control voltage is concerned, a simple digispeed card will convert the PWM signal output by Mach 3 into a control voltage of whatever voltage you want. The two halves of Digispeed are electrically seperate, the input side is powered from the computer electronics at 5volts. The output side power is taken from your controller which in your case shows 10volts. Digispeed therefore puts out a signal from 0v to 10v to control the speed.
The diagram you posted shows that the 10v supply is isolated from the rest of the drive circuitry - so I think you are on a winner - but I can't quite work out where the signal goes in to control the speed.
Does the system fire up as it is - i.e. does it run the spindle - I assume it must work - so how do you control the spindle speed now. If it is a manually potentiometer then you could replace that with leads to digispeed and it would run fine.
It is identical (and probably from a similar era) to my Omron (although mine uses 3 phase AC drive) but the controls are identical.
I have Digispeed fitted and you are welcome to have a look.
As far as the speed indicator working - mine is just a single strobe each revolution, - on the index pin. This is nice and simple. The lads who have used multiple slots had a bit of difficulty, and, I understand, one of the slots should be wider to index the position. The method you use is not important - both work. The important bit is the voltage that your indexer puts out. This should be TTL compatable so you can feed it into Mach3. I use reflective sensors - onto mirrors stuck on the spindles - with a disc you can use straight through sensors. Once you get the output voltage right you will have no difficulty.