Thanks for the replies, guys. Yup, backlash is definitely evil.. Preloaded double ballnuts are on the to-do list, but it will likely be a few months before I get around to that. In the meantime, I'll play around with disabling backlash completely to see how that'll work. I don't believe the machine in it's current incarnation will be accurate to much more than a couple of thou anyway, so it's possible that disabling backlash comp won't introduce that much error, but will provide some other benefits.
Hood, that is a great point about being within the error limit of the drives. I have tightened up the gibs significantly to get around a generally poorly manufactured machine. The following error on the drives is 127 steps, which means at 30480 steps per inch, it's a little over 0.004". I'm sure the drive tries to stay as close as possible to the correct position, but like you say, it's very possible that it gives up if it's close enough.