After much troubleshooting I believe I have isolated part of the problem. Here is the testing I have done:
Installed mach3 software without plugin on another laptop with windows 8 and very similar software. Used original unaltered xml file. Jogged axis with arrow keys and ran ref all triggering homing switches by emulated buttons. Result was the same: homing sequence was unaffected by triggering of switch even though screen LED lights still indicated switch trigger signal was being received by mach3.
Installed older version of mach3 software and then newer version (Mach3Version3.043.067). Same result.
Installed and ran exact same software on desktop PC with altered xml code which worked fine.
Installed mach3 on older (windows NT) laptop which initially worked fine. After installing ESS plugin it started playing up in the exact same manner as described above.
My summary of results at this point was that it didnt seem to be the xml file in isolation, windows 8 or the ESS plugin.
More testing continued until I was able to get the mach3 software (Mach3Version3.043.066) with ESS plugin (ESS_v10hd2.zip) to accept the real trigger signal during homing by placing a 2.0 value in the plugin config noise filtering of inputs variable for homing and limits. I am really happy that it is working however I still don't understand the problem as it still doesn't accept the emulated signal.
??
I do appreciated the help received already and hope that my struggles will assist to relieve someone else from experiencing the same pain.
I will keep my eye on the thread if anyone else is interested in getting to the bottom of this and will be happy to try and suggested fixes.
Cheers
Coogan