You have the Z axis marked as "reversed." This would indicate to me that zero for the Z is at the bottom of the travel, and the top is -5. Since you now lower the Z to set your WCS, you have moved the Z axis below 0 giving the error. That's my guess. It's been a long while since I've set up soft limits in Mach 3.
IT's something to try until someone else jumps on here.....