Lets just study what happens, because if you have backlash on your system, you have it, whether or not you have backlash compensation turned on.
Mach seems to do three things if backlash is turned on. The pulses go to the axis (which may or may not move, depending on the amount of backlash you have. Mach then seems to realise that you have reversed direction, and stops. It then applies the amount of backlash compensation you have asked for (at the speed you have set it at) and then carries on with the move
For the first x number of pulses, the axis will not move, becasue of backlash, then it will and your encoder will start to move - but surely will always be the x number of pulses behind Mach. If compensation is NOT turned on, then Mach will stop and the encoder will stop, still behind - but seeing Mach has finished the move, then obviously does not register it. If compensation is turned ON, both will stop (in theory together) - but this time registers a fault.
I think the only explanation is that you have a little too much backlash compensation on - and so when backlash is applied the encoder gets in front of Mach 3. This clearly does not matter when moving, the encoder is happy to be in advance, but if Mach stops the move and the encoder is still in front - then it must register a fault.
I can't see any other explanation.