That's strange. Sounds like the Origin button is not working or something screwy is happening.
Here's a long shot if you haven't tried already. Remove the battery, when you put it back in the display should show a flashing line all the way across. Set your spindle to 1.0", then press the Origin button to set (assuming that button actually works).
Also check if the battery low. I've seen in a few cases where a low battery caused digital mics & calipers to do weird things although most of the time they work fine until the battery is completely dead.