Well, after changing the bearings, making adjustments to Mach3 backlash, lowering the steppers' top velocity values, I finally was able to control the cut.
It appears that the speed at which I was cutting a "calibration square in wood", 56ipm, was too fast. At this speed, a .300 wide square .060 deep, was undercut by .010 before the backlash compensation. Cutting such a small square subjected the steppers to very frequent go no go motion. But even with this adjustment, I could barely get the correct cut dimension. When I lowered the feed speed to 15ipm, the cut ended up at .305. Finally some real change!
It appears that this is due mostly to either the feed speed being too fast or the stepper motor values settings being too high.
What's strange is that I've made many cuts in the past and never had such big discrepancies. Then again, my cuts were for larger dimensions.
I'll need to keep checking . Now I've lost all confidence in the machine.
tc