I was not pleased with the Lovejoy couplings, but because they were part of the CNCfusion package I went with them. I would change to one of the spiral type if possible.
On the Mach version note you have a smoothstepper, and backlash comp is new to smoothstepper. If you go back to the old Mach version Im not sure you can run the latest SS plug-in. see the smoothstepper site for some explanation of backlash. Note the one case you are doing, single .001 steps is exactly what the SS does not yet handle.