Xml looks ok so I would think your issues are hardware, especially as the DRO moves, that means Mach is sending the pulses to the port. Only thing that could potentially be wrong in your setup is the pin numbers are set wrong for the Y axis but thats unlikely if you do get movement at times. One thing I have heard on occasions is people need a wider pulse for the G540, some do, some dont and some even need Sherline mode, so may be worth a try.
Check all wiring is secure and maybe try swapping the Y onto another of the drives (remembering to tell Mach which pins)
Hood