There may be a switch that is not being made. If there is an access panel on the body you may be able to move a dog or something to make the switch.
Or maybe you can retract the quill with an M code in MDI.
We had a similar problem with ours, is there a tailstock hydraulic pressure control somewhere? If its turned really low it may not be able to retract it. Happened to ours until we increased the pressure.
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