How do you set zero coordinates?

I think I figured out my problem. I was using my finger to simulate the gantry hitting the switch to prevent crushing my switch during testing (I have done it before when my velocities were reversed) every time I did this I was getting the soft limit error, I think what was happening is I was holding down the first hit of the switch too long while it backed up to home, then I would let go as it homes in and somehow my timing was letting things go past where they should have stopped I think. Once I let the machine do it the error did not occur.

Now back to see if I get the problem trying to run my G-Code. Is the process I listed up top correct procedure? it seems like there should just be a button that zeros all axis rather than hitting each one select radio, hitting the touch off button, and then repeating....

I think what you described earlier sounded right.

I don't think there is a stock one button click way to zero all the axis coordinates, but it isn't difficult to make one, and it can be done with an MDI command.

When you touch off Z use tool n touch off and it will create a tool offset for Tool n.
put 'M6 Tn G43' in your g code before any cutting lines. (n is tool number)
Then G53 G0 Z0 will retract Z to home position.
G0 Z0 will move Z to top of part.

gnipsel.com/linuxcnc/g-code/lathe02.html

Rick G