I'm starting to think it's a post issue too. Are you using the default post?

I'm not familiar with Mach3, but let's analyze this line. Here is what I believe the G-code does:

G00 -rapid
G49 -cutter length offset cancel
G40.1 -possibly cutter compensation cancel, but not sure why it's G40.1 and not just G40
G17 - XY plane
G80 -fixed cycle cancel
G50 -ramp slope control cancel
G90 -absolute positioning
G64 - don't know what this does, but a google search leads me to believe it might be for constant velocity mode.

For a simple experiment, have you tried emulating the other safety line in your mach3 post to see what happens?

Can you attach your post? I don't keep the old posts I know I'll never use, so I don't have the mach3 post easily available to look at.

Thanks,

Dan