Might be missing your point here, but "blackhawks" uses G21 and therefore is in mm so I'd expect your DROs to be scaled up by a factor of 25.4. If you want Vcarve to output in inches just select it on the job setup page.

Ian

I don't want to sound dumb, I might have this next part totally wrong. My machine is built with hybrid step motors. Wouldn't the encoder issue come in to play if i were using servo drives?

I think we really need to clarify what you are meaning by Digital Read Out. I was presuming you had glass scales on your machine which you were monitoring via Mach however it seems that may not be the case.
If you are meaning that the X Y Z Dro in Mach for the axis position are  showing more than you expect then it would seem like Ian has mentioned the difference between G20 (Imperial) and your code being G21(Metric). If you want to see the DROs stay with your setup units (Imperial in your case) then choose the option at the top of the General Config page which will lock them to native units.
Hood

     Thanks again for everyone help. It was my DRO for my xyz axis I was referring to. It turns out the problem was just a dumb mistake on my part. Some how I had changed the post processor setting in my Vcarve program from mach3 inch to mach3 mm. I'm still scratching my head on how that happened. The computer is dedicated to this machine and has been set up and running correctly for a long time. I cant think of any reason I would have changed the set up. I would ever have solved this issue with out your help.

Chris

All part of the learning curve, it gets easier as time goes on but the learning never stops
Hood