Does your gcode sender let you preview the cutting? Does your Z move up and down as you expect otherwise (your sender or control program should have manual axis moves)? If so, the sample gcode is likely missing the move to safe height between the two cutouts. Otherwise your Z isn't moving up (look for loose couplings, etc) when the controller tries to do so. If you're cutting in multiple passes as you expect it can stay in position and move down when commanded, so I'd suspect that it can't lift the router weight. What happens if you remove the workpiece, raise the Z a bit, leave the router turned off and run the gcode (it's called air cutting, leaving the router off makes it a lot quieter)? When it moved to the second letter without raising does it continue to lower with each layer of the cut, or does it move down (into your spoilboard if you're not quick) when it does the other letter? Can you hear missed steps when it tries to bring the router up, assuming it does in the appropriate places?
I use(d) LinuxCNC on a different manufacturer's CNC router (plus a Gecko G540 controller), but the basic process should be the same for any gcode controlled device. There's some other non-PB CNCers here, too.
Not to be obvious, did you try contacting Printrbot (we're independent, not part of the PBien empire)? Unrelated to this, but you should go check out the forums at cnczone.com , too.
Modified KickStarter Classic Plus 7/2012
KS Thingybot Delta Pro 10/31/16