The "thickness" value just tells the sensor where to turn on. More or less. If you turn off the sensor, "trace off", the machine looks to the "thickness" setting to tell where the material is. The other day I had you run with the trace off. You said that it was way off the material and just welded. I would be willing to be that it was 2.5" plus "thickness" off the top of the material.
When the sensor is on, the cutting head starts at the home position, travels down to Zero + Thickness + 1" and then turns the sensor on to start "looking" for the material.
What I am proposing is, starting from the home position, going to zero + (-2.5) thickness then + 1" to turn on the sensor and start looking.
On another note. On the utility screen there is a button for 2nd machine position. Does it have a place for a "z" value? I have never used this feature before but it could certainly mess up the position for home.