You say you replaced a torch because it was stuck in "prearc mode"......I've been with Hypertherm for 31 years...and there is no such term! It is possible that the plunger (moving part in the torch that allows the pilot arc to form) was stuck....
Anyway...I was looking at your cutting specs...If you are trying to cut 16 gauge at 40 amps and at 60 inches per minute....expect an ugly, drossy cut with a lot of warpage. I would suggest getting the Hypertherm FineCut consumables...then follow the cutting specifications that are listed in the Hypertherm cut charts for "optimum" cut speeds. The specs for cutting 16 gauge are: (using Fine Cut consumables) 40 Amps, 79 arc volts, 150 inches per minute. With these specs you will get a vurtually dross free cut with little or no warpage. The torch should be cutting at 1/16" off the plate...if it is too close...then increase arc voltage....and if the height control is working you will see the torch rise. Consequently if the torch is too high...reduce the arc voltage and you will see the torch drop. If you are cutting too slow...like at 60 IPM on 16 gauge....then expect the torch to dive into the plate.
My suggestion would be to eliminate the issues. Put new consumables in the torch, follow the Hypertherm specs...but disable the height control system. make sure you have a flat piece of plate and ensure (by dry running around you r part program without the plasma on) that the torch to work distance remains constant (within .020" of 1/16") around your part. Then fire the torch and run your part program at the proper speed without the Height control. If the cut looks good, as I suspect it will....then do this same drill over again, but with the height control active.
This type of troubleshooting will help you eliminate the part of the system that is causing your issues. It could very well be an issue with the plasma, or with the height control......but neither of these systems will produce a good result if you do not follow the cut specifications that the plasma systems was designed for.
I'd be happy to help you systematically trouble shoot this...as I'm sure the folks at Torchmate would. There are thousands of satisfied users with the same equipment you have!
Best regards, Jim Colt Hypertherm