Hi jim_cliff11,
Yes I believe all you said is correct. The drive uses those 120 degree signals to do the 3 phase commutation. They are sort of like a low resolution absolute encoder.
The Drive + Motor + rotor position encoder + tachometer allows the motor to be brushless commutated and move at a commanded velocity in a controlled manner.
KFLOP+Kanalog then closes the Lead Screw Position Loop by reading the Lead Screw Encoder Position, comparing to the desired destination, and commanding the drive's velocity to move to correct any error.
HTH
Regards