Hi Bob
I asked about the threading problem in the Yahoo mach2/3 user group where the original beta testers hang out and they sent me to the 57 version I did try others but I don't remember what versions. I fought this for months blaming my machine and breakout boards.
This pdf may help if you don't have it and there may be a rev:3
As far as the tool the less hp you have the sharper that tool better be.
I thread from 300 to 600 rpm on a standard breakout board a smooth stepper may work better but 600 works pretty good on aluminum
I do all threading with coolant.
check the pdf file, your window in the disk may need to be longer to see a defined pulse. my pulse width is optical but had to be wider
here are all the mach3 versions
ftp://ftp.machsupport.com/Mach3/
here are all files related to mach3/4 from their ftp site at Newfangled solutions
ftp://ftp.machsupport.com/../
there are more threading wizards on the mach3 forum and from newfangled solutions there is a conversational lathe program the will do most everything plus threading (purchase item)
Good luck
Steve