Hmm... the backlash doesn't sound too bad so back to head scratching as well I'm afraid.
So, without cutting, can you make a move by just entering a G1 command in Mach3 MDI window and measure how far it actually moves.
Can you fix a vernier to your bed somehow and drive the head against that to measure?
I would have thought if you can get the calibration right so that what you measure is the distance you tell it to move, that would be a good start.
If the test files are still out then, I think you should leave the calibration as is and...well...maybe all this head scratching between us will loosen something and we'll have an insight.
