Hello fellow mach users, I have recently purchased a Midamerica tapering lathe and would like to change the way it is currently setup. Currently it is setup to run using radial moves, as a lathe guy this is backwards to me. The programs supplied with the machine are very simplistic but also very confusing. Keep in mind the machine has a router mounted on the backside of the workpiece

G01 Z.250
G01 X.005
G01 X-.020 (you touch the piece and zero out the control)
G01 X-.150 Z-15.

Can the x axis direction be reversed like you can in Mill? If so i havent seen it.

What i would like to see is this,

G01 z.250
X1.250
Z.0
X1.300 Z-10.

I found where you can switch from Radial to Diameter, but it appears its not as simple as that. When I tell it to move X.125, it barely moves. Do I need to recalibrate the X once i change it to diameter? Any help is greatly appreciated, screen shots are always helpful, especially because i am new to the lathe platform.

Mach 3 or 4?  On Mach 3 if you change from Radial to diameter you certainly need to restart.  No re-calibration should be needed (not quite sure what you mean by calibration) but you will need to re-home.