I have Mach3 running a plasma table with a floating head mounted torch. The system works fine.
   I am in the process of adding a DIY THC and doing some testing. Since I'm doing the testing with the torch off, an external supply is providing the torch voltage signal to my THC unit. My THC has been bench tested and appears to be correctly wired into Mach 3 and working in that I can see the Torch UP and Torch DOWN leds operate on the diagnostics screen as the simulated plasma voltage changes. Since the torch is off for testing, the THC On signal is hardwired to ground (active low) and the led for THC On lights in the diagnostic screen. I've examined various videos re getting Mach3 set up for THC and I think I've done what's required. However when I run a simple tool path, even though the UP/DOWN leds change as the simulated plasma voltage changes, I get no response on the Z axis.
   Would the hardwired THC On signal being asserted before the Torch On signal is produced for piercing be preventing the THC from working?

Make sure that Mach3 is properly licensed and that THC is enabled.  You should be able to see THC action in test mode.

Arturo Duncan
https://cnc4pc.com

Yes, my Mach3 is licensed. But you didn't address my question:
Would the hardwired THC On signal being asserted before the Torch On signal is produced for piercing be preventing the THC from working?

Please refer to the instructions from the vendor or the unit you are using.   Normally it should not be an issue, but maybe there may be a macro or something that may change this.
But why do you want to have the ARC ON if it is not?  There is a reason for using the ARC signal to start the THC action.

Arturo Duncan
https://cnc4pc.com

  This is a DIY THC that I built based on the unit designed by Swolebro, so there is no Vendor instructions to refer to. I'm doing the THC testing with the plasma torch not running just to try save wear and tear on the consumables. So, the torch voltage signal is coming from an external supply. Yesterday I verified that when in THC mode (led next to THC button is green), the tool path won't execute until Torch On is asserted. If Torch On is hardwired asserted the tool path executes fine. Also yesterday I found that the number shown in the "Curr." window will tick up negatively when the Torch Down signal is present, during tool path execution. This would indicate that some portion of the Mach3 THC function is executing. However, there is still no correction to the Z position regardless of a Torch Up or Torch Down signal.
   Any suggestions as to what I'm doing wrong, or not doing?

Maybe you can use this instructions and files:
https://cnc4pc.com/blog/post/manual-mach3-configuration-using-thc-1-with-the-ethernet-smooth-stepper-with-macro

Arturo Duncan
https://cnc4pc.com

The instructions in that link are basically the same as what I've been doing. So Thanks for that but I'm no further ahead. It seems like THC is still disabled even though my copy is licensed. I don't know what else to try in Mach3 and am thinking now I should try Mach4. Apparently the demo version will work for 5 to 10 minutes without licensing. At this point I don't know what else to try.