Thanks for the gcode. I tried the code you provided and I noticed it used both conventional as well as climb to cut the pocket. Well unfortunately the results were the same. It's still off by approx .008" at this point, which IS better than I was getting before with 0.100" undersize. It turns out it's not the code. I bought a new motion card, and the first thing I noticed with the new card was the the "thumping" I was getting every full rotation of the stepper motor, that is now gone. No more thumping. Second issue I had with the old card, was "runaway jogging" of the motors. Mach3 would jog to infinity until I removed the usb cable. For now that seems to have gone away also. Fingers crossed.
I have only calibrated the x/y using a ruler. I may be able to shave down that .008" shortcoming to .003" if I calibrate the x/y using a dial indicator.
Again, thanks for your help. Running this test help verify its not code related.