Saw your post and thought I would drop a line. First off I do not have an LM lathe (but I do have an LM TMC-1000 CNC mill!) but I have retrofitted a similiar type lathe to modern CNC. My lathe is a COLNE 5C from the mid 80's and the electronics was old and archaic. Size wise this is slightly larger than yours which is I beleive based on an early SHERLINE Lathe, whereas mine is about the size of an EMCO 5. I swapped out the motors for some modern PACSCI bipolar units, replaced the stepper drive with a modern unit fropm XYLOTEX and to have computer control of the spindle speed and direction I used a Bob Campbell Combo breakout board. Added a spindle indexing opto sensor and bob's ur uncle. I run it under MACH3TURN and have been very pleased thus far. In fact I just this evening did my first successful CNC threading of a piece of 1/4" aluminium rod. I know it's not that hard to thread a piece of rod with a die (probably faster) but it was neat to try and know that it works.
You will not be disappointed with any of the components I mentioned above. The quality and service from the respective suppliers is excellent! I also use a XYLOTEX controller on my CNC router and will at some point also convert my TMC1000 to a 4 axis xylotex to get it running under MACH3 as well.
Your Lm set-up, to be complete, requires a separate black control box as well as a slotted PCB card that goes into the computor. As well there are cables that run between the two units and as well to the lathe. Another option for you might be to watch ebay and buy a complete stock controller for this machine as many show up there after conversions are done.. They do have DOS/WINDOWS based hardware-software. The PC uses a slotted circuit board to interface with the black control box, you may be able to get the software for free from Intelitek which still makes these products however the circuit board for the pc is fairly expensive maybe about $500 and there were several versions. I have an older EISA bus style card and it requires an ancient PC wheras the newer cards are PCI bus which modern PC's still have. I run my LM under Win95 and got the software (free) by e-mail after a request to the service dept. It actually works excellent and I like it but will upgrade at some point to standardize all my machines on MACH as as well to get a 4th axis on my mill which the factory software doesn't allow!
PS If you are interested to see a few pics of my conversion feeel free to drop a line direct to email@example.com and I will email them