Thanks Rich and MC...
I like Lazy Turn. It is simple and it is free. I have checked the settings for radius-diameter mode in LT and Mach Turn and still no joy. Reading through other posts I see that quite a few other users are having similar problems, so I do suspect a bug.
I have 2 workarounds. First, to work in radius mode in LT and M3, and use fine turning only. In initial run I take deep cuts, then still in fine mode I take the finishing cuts. The only disadvantage of this is having to work in radius mode and the file size is bigger. Not that file size matters.
The second workaround, is to use diameter mode in LT and M3, and to use another program to double all of the X measurements in the fine mode runs. It does work, but is a pain.
Thankyou for the suggestions of Cambam and Dolphin. Dolphin looks good, but the best price on offer to me is $395. I am not sure why I am not being offered the hobby price. I sure as hell don't make any money out of this hobby! Cambam for the lathe looks to be in a very early stage of development.
What a shame the Lazy Turn programming has not been tidied up!