Newbie questions???????

I have started to retrofit my X2 mini-mill using a Xylotex 3 axis
controller. I plan on using Mach III.

#1 Does Mach III support 2 axis use allowing manual control of the Z
axis? I have used 2 axis prototrac retrofit on a bridgeport and want
to operate in similar mode.

#2 I want to add an "emergency" (aw sh__) button to the machine. I am
also unclear as to the function of "opto-isolation". I am thinking of
adding a opto-isolated breakout board from homeshop cnc. Will this
break-out board allow for a very simple set up of an emergency
switch??? Does the opto-isolation merely reduce "noise" or does it
protect the computer also???

Any assistance/insight on these would be much appreciated.

Thanks,

Jack