Hood,
1) what else, short of running into a limit switch, could make the axes "dereferenced" (dereferenced means, Mach3 changes an axis state into boolean state "position not referenced"? (except modifying settings in Configuration->Ports and Pins->Input Signals).
Verbal definition: "Derefed axis" = axis coordinate value not related to home. Mach3 has a presupposed boolean state "axis X/Y/Z/A coordinate value is referenced to home". Or home switch signals available/not available state.
2) I it is probably more safe to verify the presumed behaviour of the conditions monitor on the X or Y axes? I.e. on purpose running into a limit switch and see how Mach3 reacts. It seems, that the conditions monitor evaluates its checks in idle mode, when not running G-Code.
Peter.