One possibility that might be worth checking is your choice of disabled axis. Most retrofit cnc lathes will use a mill's X and Y motors, but transposes the names to Z and X respectively. I am not saying this is the case here, but perhaps there is special logic written in your cnc that expects the "Y axis" to be the lathe X axis, and this might be the only axis that can handle the diameter logic correctly? Just a guess.
First you get good, then you get fast. Then grouchiness sets in.
(Note: The opinions expressed in this post are my own and are not necessarily those of CNCzone and its management)