I am trying to get the USB software to compensate (offset) for the tool diameter.
I am not sure how to properly set up the tool in the software so when I enter a G41 or G42 code it won't kick out an error.
I am using the default PP settings Mark supplied. I choose tool 1 in the tool change settings menu,( the Phlat bit) and then edit the G-code to include g41 or G42 where I need it. When I save the modified code and exit, it kicks out an error "the tool radius compensation compensation tool is not greater than the tool radius (70) line 4 G00 Z0.1870"

So what am I doing wrong?

 

Error 70: Tool radius compensation entry move length is not greater than the tool radius

Tool radius ompensation requires lead-in move. Lead-in move has to be at least as long as the tool radius that you use.

http://www.timgoldstein.com/cad_cam/diacomp.htm

 

So, from what I have read to what your saying is that rather than the machine performing a rapid traverse into position, I need to add a line of code that feeds it into position with the offset?

 

Not exactly.
Move from current position to first compensated position is called "lead-in" move. Length of this move must be larger than tool diameter.
You can add a non compensated move at beginning to make sure, this is always the case.
If you draw all possible scenarios you'll see that it is very logical.
Here is some more reading material on this topic:
http://linuxcnc.org/docs/html/gcode_tool_compensation.html#sec:Cutter-Radius-Compensation

 

That article makes it a lot clearer. I think I got it now. I will give it a try and let you know how it comes out.