Thanks for your input Larry. I think you are right, I was loosing steps on the incoming step to the drive.
From the gecko website:
When using COMMON connected to GND:
The minimum specified STEP logic '1' time is 1 uS.
The minimum specified STEP logic '0' time is 2.5 uS.
Use narrow logic '1' step pulses.
The STEP input cannot be driven with an open-collector driver.
3.3V and 5V logic level drivers can be used.
When using COMMON connected to +5VDC:
The minimum specified STEP logic '1' time is 2.5 uS.
The minimum specified STEP logic '0' time is 1 uS.
Use narrow logic '0' step pulses.
The STEP input can be driven with an open-collector driver.
The STEP input cannot be driven with 3.3V logic unless COMMON is connected to 3.3VDC.
The pulse time I am outputting with the KFLOP is 2.5us. I'm assuming this corresponds to the STEP logic '1' for the gecko drive. I had COMMON on the gecko drive connected to +5VDC when I was having trouble. I just now switched COMMON to GND and am not loosing steps as far as I can tell. I should be up and running now. Grounding the encoder cable shielding still keeps the servo from engaging. I'll just keep it un-grounded for now. There is a voltage potential between the cable shield and earth ground of a few mV. I think this is normal but how grounding it makes things go bad has me completely stumped at the moment.