One thing that I've seen cause this before -- is the move speed for the Z axis being set to zero.
Try running a normal file with a move speed command at the beginning (This command shows up like "MS,3,1" in the header of the file)
or open the editor in fabmo (pencil icon) and type in the following:
MS,3,1
ZZ
MZ,1
This will set the move speed of the z axis to 1 ips, set the current z position to zero, then try to move the z axis up by 1 inch.