Ok I have just rigged up a cable to the parallel port and hooked an oscilloscope to Pin 2 which is your X axis Step pin. I jogged the axis and got the pulses showing on the scope, pressed the Offline button and again jogged and nothing so it seems to be working fine here with your xml. I tried a few different versions of Mach and all were fine.
What version are you using and I will again test, you will see that if you go to About menu then choose About Mach.........
Hood