The encoder resolution is not equivalent to the microstep resolution of the PD60-x-1260. The magnetic encoder has a resolution of 1024 and there are 200 full steps in the motor:
200 *256 = 51200 (total number of microsteps in 1 rev)
51200 / 1024 = 50 (microsteps per encoder count)
Since you are programming a deviation of less than 1 encoder count it will never work, the motor will automatically stop every time. You will need to program a higher deviation, keeping in consideration that encoders have a built in accuracy range and they will fluctuate if they are between counts.