I have not used backlash in long time because I got rid of it on all my machines. 
But that silly .001" can be a real pain to get rid as there are so many things that can add up to create it.
The  50-50-50 rule which you may want to consider is as follows:
50% - The max velocity at 50% ( works for steppers but your using servos so will need to play around with the value )
50% - Set the shuttle Wheel setting in configuration to .0050  to .050 ( .5 too slow )
50% - Backlash speed 
The Shuttle Wheel Accel is in seconds. How exactly is the" time" applied to the backlash "cycle"? Well I don't really know.
 It's internal to Mach. By observing the difference in how the motor reacts to different settings you will see that it affects the overall time
 it takes for Mach to take up the backlash and at say a value of 5 you will find that over five seconds the handwheel / shaft will turn
 rather slowly. At 0.005 sec its almost instantaneous. In the real slow setting, and say you jog a distance of .1"  you will find there 
seems to be almost 3 distinct motor responses in the cycle,....... a small rotation then deceleration...... then backlash taken up 
over a time...and then  accel and move to finish the distance.
So to get of flavor of it you need to start slow, observe, listen to see what is happening over an operating range.
Work your way up in settings.
Hope this helps,
RICH