Had the same problem... CSMIO IP-S not responding to THC UP / DOWN
Solution is to not use the standard M3 that starts the spindle relay DoSpinCW() but use ActivateSignal(OUTPUT1) and everything works as expected.
Don't ask how we got to this solution... lucky for us we used two separate heads for plasma and oxy and separate Mach3 profiles and the oxy profile did not use
spindle relays and its capacitive thc worked.... that gave us a clue... after couple of DAYS

Using the option that enables thc even when not in thc mode should not be used.