Newbie to CNC - 400 step/rev motors

I am a newcomer to the home-built CNC hobby. I am currently in the
process of planning the build-up of my CNC-ready Taig mill. I'm still
debating over controllers but leaning towards Xylotex. I'm on the
search for stepper motors and have found many different kinds. I've
read through the CNC for Hobbyists document and I'm stuck on the part
that covers the number of steps per rev. Am I only looking for 200
step motors or can I also use 400 step motors? From reading the on the
Xylotex website I see that it can be configured for full, 1/2, 1/4,
and 1/8 step. Will this alllow me to use motors besides a 200 step?
Will this mean higher resolution? I have found a motor (Vexta
#PK268M-02A) Rated around 190 oz-in. 4.5 VDC, 2 Amps, 400 Steps/Rev,
Step Angle 0.9°, 6 Wire Leads, 2.25 Ohms. Does this sound like a
possible chioce to match up with this controller? Also, does anybody
have a source for a housing for the controller, power supply and misc.?

Thanks,
Kevin