Read the mach3 manuals, especially the dthc one. They aren't on this site, go to artofcnc, and the mach3 forums.
Need more info:
-will the torch fire from the mach3 button?
-can you post a pic of your z switch?
-have you put a switch offset in your post processor?
-does the switch actually work - can you see it make in the diagnostics screen?
-does the dthc test button at the bladrunner box make the on-screen led's flash? (test cycle flashes screen led's - up,up,up, down,down,down, alternating with thc on)
-is the torch rapiding into the work, or are you being confused by the tip touching the work before it begins?
I'm guessing you have no switch offset in your post processor - so when you home the Z, you are actually placing zero below the work. You have to account for the distance the floating head travels to make the switch, from when it contacts the work.
Think about the z zero, its when the tip touches the work, not when it makes the switch! Zero is the work surface. touch the surface, zero your Z DRO, and then move Z down until the switch makes in diagnostics screen. go look at the Z DRO again, it will be about .25 (depending on your switch), this needs to be put in the post processor.)
Detailed here:
http://www.bulltear.com/forums/viewtopic.php?t=9925
Note that late in the thread i found a spot in the post for the switch offset, AND the mach3 switches screen.
Hope this helps.