Ahhhhh... to control the relay to turn the spindle on and off, you do NOT use the spindle motor on the "Motor Outputs" tab. That is designed to be used when you have a stepper (or step servo) motor running the spindle. Set all pins and ports on the "spindle" line to zeros. Instead, you need to configure one of the general purpose outputs. I haven't run Mach3 in quite a while, so this is from my very rusty memory:
On the spindle configuration tab in the upper left corner is something like "spindle control" or "relay control". There is a check box to disable spindle relays (always seemed backwards to me), then two boxes that allow you to assign output numbers to "spindle forward" and "spindle reverse" (i.e. M3 and M4). If you enter "1" in the box for "spindle forward, that means that output signal "Output #1" on the "Output Signals" tab will used to signal the router should be on and rotating "forward".
So... presuming you only want to turn the spindle on and off, not control direction, un-check the "disable spindle relays" box, set the "spindle forward" box to "1" and the "spindle reverse" box to "2" (or any number OTHER than "1"). Click on "Apply".
Next, go to the "Output signals" tab and scroll down to "Output #1". Assign that to port 1 pin 16 with a red "X" in the "active low" (or "inverted" or whatever they call that column). Then click on "apply" then "OK".
You should now be able to enter M3 and have the K2 relay energize and turn on your spindle. M5 should de-energize K2 and turn off your router.