Larry,
It seems you have one of our breakout boards. All our breakout boards have a terminal called EN, which require a +5vdc signal in order to enable outputs. We recommend you connect the e-stop signal in parallel with this terminal. So if you use a NC switch for e-stop, when you press it and interrupt the signal, you will make the controller aware of the e-stop situation and disable the outputs at the same time. The idea is that it is not the PC based controller the one taking the action of stopping the system. Maybe this wiring diagram illustrates it better:
http://cnc4pc.com/Tech_Docs/E_STOP_N_EN_Wiring.pdf.
We do not recommend taking power off the breakout board or any other logic in your setup on e-stop, as this could allow noise to get in and cause unpredictable actions.
I agree with Ray that if using servos, and keeping the driver and encoders powered all the time, using e-stop just to disable the drivers, the lost steps could be minimal, just the pulses sent to the driver between the time the breakout board outputs were disabled and controller stopped sending pulses. If you wire it this way, you must really know what you are doing, as when the drivers are enabled back again and if they moved, they could cause a violent motion. I never had this case, but always imagine it could be very dangerous.
Arturo Duncan
http://cnc4pc.com