Let's focus just on fwd/rev/stop.
While the brain that sets p02.01 is enabled, manually setting that param on VFD will not work, since as soon as you set it, the brain resets it. It will lock p02.01 to 0, while outputs1&2 are inactive.
When you say:
I then hit the spindle button on the screen and all MODBUS outputs registered correctly. Nothing turned on brain looks correct.
I'm not 100% sure I know what you mean. I'm not native English speaker, and my screenset is completely custom, so I'm not sure which button you mean, and how "nothing turned on" is correct. That's why I suggested using M3,M4 and M5 commands via MDI. If the button you're pressing is "Spindle CW F5" on standard screenset, brain view should show a change of output1 state and the outputs of modbus terminators should read MOD:1-P0: 18.0000 and MOD:1-P2: 3.0000
Please re-check that.
I found (but I may be wrong) that the order of brains doesn't matter if you're not using the output of first brain to feed the input of second brain, which output is used as part of the input of the first brain (some sort of state lock) - and that the results of that are not consistent/dependable on. You can look at the brain as switch, it just reacts to input states and holds the output state in regards to processing done on those input states (regardless of the input state, active or inactive). Same with the modbus, it's just a "virtual memory", like a table with cells that hold some value, either Mach or VFD can read/write into those cells.
To verify that there is no error in communication, please check the value of the VFD param 09.02 "Transmission fault treatment" - it defaults to 3 ("no warning"), so set it to 2 ("warn and coast to stop") - the error, if there's one, will be displayed on digital keypad. I've noticed that you have "Use RTS for transmit" enabled on serial modbus config screen. I'm using RS232 to RS485 converter that does not need that option enabled, you may try disabling it also.
I don't quite understand what you mean by:
I set to not use the reset and still locked out.
I presume that by "locked out" you mean that you can't change the p02.01 manualy, but what you mean by "to not use reset" ?
The only things that come to my mind in regards to Mach3 or VFD settings are that the outputs 1/2 may be used by some other Mach3 feature you have enabled (mine are configured as active, port 0, pin 0, active low), and the VFD param p02.01 is being set by some VFD input - config group 04.xx (I've never changed those, all are default)