Thanks for the reply Steve. I had a little time to troubleshoot today and here is what I found:
The voltage between GND and +5V on J11 and J12 is indeed 5.0 volts. However the voltage between pin E (where the z-home input is wired) and GND is about 4.2V. This is the same for the X, Y and B home switches (pins 11, 12, and F, respectively). However X, Y and B home perfectly every time.
I tired the 1k resistor between J11 +5V and J11 pin E. This brought the voltage up to 5.0V, but still the same issue. I verified that the voltage gets pulled to 0 when the switch closes.
I will also add this: the LED for pin E always works. It will illuminate and stay steady, while the status light on mach3 will flicker an eventually die out as it heats up. So it would appear that the PMDX-126 is seeing the switch, but somewhere in the line of communication between it and the PC, the message is lost.
And again, cooling of the transformer (and the surrounding area, kinda hard not to when you are blowing air at it) will cause the light in Mach3 to eventually flicker and then reappear, until the cooling is stopped at which point it flickers and goes dark again.
Finally, I decided to measure the mains voltage and found it to be 260V. Is this our issue? I see that the voltage switch is on 230V, and the board is rated for 220-240V. What would 260V do? Is this causing things to overheat?
Thanks!!