I hate this job. This is the 3rd or 4th time ive done it. Everytime its a struggle. The O.D. is .370, minor diameter is .275, 1/8" thread, 4 TPI. The length of thread is about 5.4". It is supported with a tailstock and a button as pictured. It takes alot of thread relief to allow for the helix under the cutting edge. Cheap Shars inserts just break right off. It has to be done with quality top notch inserts. I use 1/16" grooving inserts because 1/8" causes too much deflection. Now, my problem is that the first 1-1.5 turns of the thread is too wide. I have 4 spring passes programmed and it is pretty much cutting nothing when it finishes. It seems like the acceleration in the z axis is too fast for the first 1/2" or so. (overshoot maybe) I can only start off the part by about 1/4". I've tried lowering the rpm but it still does the same thing. The motor acceleration is pretty fast as it is ac servos. I tried turning off cv also. The last time i did these it was with a much older version of mach3. I don't know what else to try.

It could also be the spindle slowing as it takes the load of the tool and tried to compensate.  A leading brass support bush and faster speed may help, a bit like they do when milling long threads.

I don't think it is a slowing issue, that would make the threads closer together. It seems like the z axis accelerates a little too fast then settles down to the right feed in the first 1/2" or so.

Are you running with a spindle encoder or a single slot index?

Single slot disc

  It seems like the acceleration in the z axis is too fast for the first 1/2" or so. (overshoot maybe) I can only start off the part by about 1/4". I've tried lowering the rpm but it still does the same thing. The motor acceleration is pretty fast as it is ac servos. 

Maybe the servo is "over damped" a bit.   
You might fiddle with the tuning and see.

That could be why, you are only getting a speed update once every rev so the pitch can only be adjusted once a rev.  With large leads this can be an issue.