Cutter height

I am having an issue with my Handibot. When I send a job to get engraved the cutter goes about a 1/2" above the workpiece I am trying to engrave.
I did reset the height after I put in a new bit. I tried that a couple times and got the same results. I even tried to engrave the sample work from Handibot and I got the same results. Any suggestions?

A couple of things could be causing this--either the tool is being told to go to the wrong height (due to a weird setting in VCarve) or the tool is physically unable to reach the depth of the carving. When you are zeroing your bit--look over at the Z motor--there is a bolt that sticks up in the corner and acts as a lower limit on Z travel (keeping the tool from crushing the wiring that runs to the spindle). If you're close to that limit then the tool may be hitting it when trying to plunge into the material--this would stall the motor and cause it to lose steps and think it was lower than it actually was.
The VCarve issue would be having the material set up to "zero to bottom of material" rather than the top...I only think of this because 1/2 is a pretty regular material thickness and if that was the thickness you entered and then had told it you would zero to the bottom of the material then it would be cutting exactly 1/2" too high.
The other thing to make sure of is that you have the latest version of the macros which can be downloaded from the fabmo apps page (docs.handibot.com)