You don't want to try and use the machine itself as a current return path. Not only do all the bearings a sliding parts not make for a good conductor but if the machine is bonded to earth ground you are also running trying to run a low voltage return signal through earth ground (which is a bad idea all the way around).
I use a two lead cable with alligator clips. Clip one lead (the common) to the bit, clip the other to the part/tool touch plate.
I finally got it to work. Jeff it was your comment on some other thread about the breakout common voltage being different than the earth potential that put me on the right track. There is a lot of discussion about how you don't need a second wire if your machine is properly grounded, and I am here to tell everybody that is a load of poppycock.
The machine has a three wire power cord running to the spindle, which was connected to earth ground at the control box. Given that the spindle itself (PC 890) is double insulated and has no ground prong on its two conductor power cord, that ground wire from the control to the spindle was just sitting idle. There was no way I was going to run a third wire out there when I already had an unused one routed nicely through the cable carriers. Plus I could not find an alligator clip large enough to fit on a half inch end mill. So I took a few liberties.
1. I put a three pronged cord on the router and tapped the ground wire into the top bearing block with a #6 machine screw. This allowed me to shorten the cord also, which was overdue.
2. I took the other end of the ground wire (in the control box) off the earth ground and tied it to the breakout board common ground. There is still plenty of earth ground connection going on in the control box; the only thing I moved wasn't being used anyway. I am a bit nervous about some sort of stray voltage flying around inside the router frying my breakout board, but so far so good.
Now my LED lights flash on reliably when the bit contacts both plates.
There is much I still do not understand about what is getting pulled to what voltage; for instance the voltage at pin 15 stayed reliably at about 3.9V relative to earth whether it was shorted to common or not. Isn't it supposed to get pulled low? And now the plates register zero volts to earth at baseline, whereas I thought they should have some voltage on them until they are shorted to the tool, at which point they get pulled low.
But this is all academic as the autozero routine works fine now with Tempest, the 2010 screenset and ESS. I did have one issue where the Z homing limit switch was not working; this seemed to go away after I disabled "persistent DROs" and now it is working fine again. Some scary sounds came out of that little stepper but I think it is OK.
I am really happy to have this feature functioning. However I am also amazed at how difficult it was to find the two or three threads that deal most fully with the issue, and how no one really seems to have discussed the fundamental aspects of "pulled high", "pulled low" etc., how resistors play into that, and why the breakout board common ground voltage is not the same as earth ground. I suppose it is all on Wikipedia.
Back to making dust!