First of all thank you for your prompt reply Hood.
I tried to reply with the files you asked for but everything froze on me & I couldn't even log back onto the forum once I got out of that.
Anyway .. it looks like the problem is handled .. not going to say for positively, absolutely, without a doubt, handled .. but I found something that certainly changed the situation.
Hard to believe but I hadn't checked my axis calibration since installing the smooth stepper and I'm embarrassed to say my Z axis was off by a MILE!
X & Y were very close, but Z was out by .25+ ... I'm amazed I've been able to make anything with it like that & I can't say how long it's been like that, but once I re-calibrated it tool offset is working.
I had a thought in the back of my mind because like mentioned, when I would do the math, everything was adding up but the tool wasn't touching the part ..
Anyway, chalk another one up to the CNC / Mach3 'Learning Curve!'
Thanks again