Dave, the motors you're using don't have any tach signal, they only have encoders. If things weren't wired correctly, then the drive would trigger a fault.
Your following error does sound pretty high. My Lathe can manage sub 50 on both axis, but it took a bit of manual tuning to get there, with some tips thrown in from somebody who really knows about tuning.
Essentially you keep increasing P until things go unstable, back it of slightly, increase D until things go unstable, then back it of slightly.
Repeat the above a few times, until you find the limit of stability.
Then apply some I, but once you apply I, you may have to decrease PD, as I makes things unstable.
Auto-tuning will usually get reasonable performance, but it rarely works well with unbalanced axis i.e. vertical Z axis.
There could also be a problem with the controller fighting against any inbuilt filtering in the servo drives, which is something I hit when trying to run my Kinco servos in Torque mode. Torque mode should in theory give you better performance, but tuning is far more critical.
I'm not sure what tuning/plotting capabilities CS-Labs have, but KFlop comes with some very good tools so you can generate various plots, and see exactly what is happening. Being able to see the output oscillating, along with the following error under different conditions makes tuning far easier.