The encoders are presumably part of the servos and will feedback position to the associated motor driver. Mach3 has no knowledge of encoders as such, it just assumes that the machine is driven by stepper motors, even if those "steppers" are actually servos. If it sees a command to move a certain distance, say 1mm, it just uses its knowledge of how many steps are needed for the axis in question to move 1mm. This is set by the "steps per unit" parameter in the config motor tuning menu box. If you know the resolution of the encoders/servos, the ratio of any gearing between the motor and the screw, and the screw pitch, this can be calculated. But there is also a convenient wizard somewhere which can measure and configure it for you.
In case you don't have it download a copy of the Mach 3 manual from the Newfangled Solutions website - this covers all of this stuff.
If you are still in touch with the guy who sold you the machine, ask him if he still has a copy of the xml config file (see the manual to read about this) that he was using. This file contains all the setup information, ports/pins/steps etc, and is backed up every time Mach3 runs. If you can get a copy of this you should be able to just copy it into the correct folder and it will configure the machine for you.