Hi,
In Step/Dir mode the Controller only commands how to move. The manner the motor actually moves entirely depends on the Drive. KFLOP only monitors how the motor moves. Thousands of counts of following error seems very large. What kind of system do you have? Where is the encoder? What is the resolution? How is the axis configured?
If you want to have KFLOP make corrections to what the Drive is doing use Closed Loop Step Direction mode. See here.