vardiff *should* be disabled, but I'm going to check again.
MPOS also has some settings for difficulty, double check the global.inc files in the include - config folder?
also I guess try diff=4 as that's what it keeps trying to set just before it goes (high-hash)
It is weird though, as (high-hash) is what gets returned when you submit a share which is below target (I temporarily hacked cgminer to do this for diff=1 shares as I was worried that I was missing out on these shares, seeing as I was finding twice as many blocks than my credited BLC, its catching up now though).
Unfortunately when its (high-hash)ing it rejects everything, even perfectly good blocks!
pi@tvpi ~/blakemine/cgminer-ztex $ grep BLOCK log.txt
[2013-12-16 14:41:16] Rejected 000700b3 Diff 9.36K/2 BLOCK! ZTX 0 (high-hash)
[2013-12-16 16:46:42] Accepted 0009a2d6 Diff 6.8K/2 BLOCK! ZTX 2
[2013-12-16 17:09:29] Accepted 00088cb5 Diff 7.67K/2 BLOCK! ZTX 2
[2013-12-16 18:27:48] Accepted 00070243 Diff 9.35K/2 BLOCK! ZTX 0
[2013-12-16 18:35:22] Accepted 000fc068 Diff 4.16K/2 BLOCK! ZTX 1
[2013-12-16 20:20:46] Accepted 001268f9 Diff 3.56K/2 BLOCK! ZTX 3
[2013-12-16 22:03:06] Accepted 0006d3fa Diff 9.6K/2 BLOCK! ZTX 0
[2013-12-16 22:07:25] Rejected 000db825 Diff 4.78K/2 BLOCK! ZTX 1 (high-hash)
[2013-12-16 22:41:50] Accepted 00039cfe Diff 18.1K/2 BLOCK! ZTX 2
[2013-12-16 22:56:04] Accepted 0002537c Diff 28.2K/2 BLOCK! ZTX 2
[2013-12-17 05:55:30] Rejected 000c3019 Diff 5.38K/2 BLOCK! ZTX 1 (high-hash)
[2013-12-17 05:55:31] Rejected 5f549b7b Diff 2/2 BLOCK! ZTX 1 (high-hash)
[2013-12-17 06:19:04] Accepted 00192e2c Diff 2.6K/2 BLOCK! ZTX 3
[2013-12-17 08:37:07] Accepted 00104786 Diff 4.03K/2 BLOCK! ZTX 1
[2013-12-17 09:56:06] Accepted 000f8b55 Diff 4.22K/2 BLOCK! ZTX 1
[2013-12-17 11:02:33] Accepted 00197991 Diff 2.57K/2 BLOCK! ZTX 1
[2013-12-17 11:29:29] Accepted 001afc84 Diff 2.43K/2 BLOCK! ZTX 1
[2013-12-17 13:42:50] Accepted 000ddeec Diff 4.72K/2 BLOCK! ZTX 2
[2013-12-17 14:10:56] Rejected 001592dd Diff 3.04K/2 BLOCK! ZTX 3 (high-hash)
[2013-12-17 14:11:01] Rejected 5a01601d Diff 2/2 BLOCK! ZTX 3 (high-hash)
[2013-12-17 16:06:44] Accepted 0009a7e5 Diff 6.79K/2 BLOCK! ZTX 2
[2013-12-17 17:16:34] Accepted 00062c43 Diff 10.6K/2 BLOCK! ZTX 0
[2013-12-17 17:53:01] Rejected 000dc130 Diff 4.76K/2 BLOCK! ZTX 3 (high-hash)
[2013-12-17 17:53:01] Rejected 64bb6968 Diff 2/2 BLOCK! ZTX 3 (high-hash)
[2013-12-17 19:41:49] Rejected 0008c64e Diff 7.47K/2 BLOCK! ZTX 0 (high-hash)
[2013-12-17 22:44:34] Accepted 000f00e6 Diff 4.37K/2 BLOCK! ZTX 1
[2013-12-18 03:11:17] Rejected 0000cab4 Diff 82.8K/2 BLOCK! ZTX 1 (high-hash)
[2013-12-18 04:08:04] Accepted 0005b14f Diff 11.5K/2 BLOCK! ZTX 2
[2013-12-18 04:08:57] Accepted 000f0699 Diff 4.36K/2 BLOCK! ZTX 1
[2013-12-18 07:39:51] Rejected 001399ca Diff 3.34K/2 BLOCK! ZTX 2 (high-hash)
[2013-12-18 11:44:53] Accepted 000b045d Diff 5.95K/2 BLOCK! ZTX 1
[2013-12-18 13:42:35] Accepted 000d60d5 Diff 4.9K/2 BLOCK! ZTX 0
[2013-12-18 13:51:20] Rejected 00097f95 Diff 6.9K/2 BLOCK! ZTX 2 (high-hash)
[2013-12-18 16:07:27] Accepted 00026ae3 Diff 27.1K/2 BLOCK! ZTX 0
[2013-12-18 17:29:17] Accepted 00131ecc Diff 3.43K/2 BLOCK! ZTX 3
[2013-12-18 20:03:17] Accepted 00041716 Diff 16K/2 BLOCK! ZTX 2
[2013-12-18 20:14:35] Rejected 000adc2a Diff 6.03K/2 BLOCK! ZTX 1 (high-hash)
[2013-12-18 22:00:07] Rejected 00104fe0 Diff 4.02K/2 BLOCK! ZTX 2 (high-hash)
[2013-12-19 04:15:02] Rejected 000a0178 Diff 6.55K/2 BLOCK! ZTX 1 (high-hash)
[2013-12-19 04:28:57] Accepted 0010fb80 Diff 3.86K/2 BLOCK! ZTX 3
[2013-12-19 05:45:14] Accepted 0008c6a6 Diff 7.47K/2 BLOCK! ZTX 1
[2013-12-19 08:11:53] Rejected 000b9363 Diff 5.66K/2 BLOCK! ZTX 3 (high-hash)
[2013-12-19 09:23:25] Accepted 000b2ef3 Diff 5.86K/2 BLOCK! ZTX 1
[2013-12-19 09:33:38] Accepted 0009cf5a Diff 6.68K/2 BLOCK! ZTX 3
[2013-12-19 10:03:50] Accepted 000a8ba6 Diff 6.21K/2 BLOCK! ZTX 1
[2013-12-19 10:19:14] Accepted 000211f3 Diff 31.7K/2 BLOCK! ZTX 0
[2013-12-19 13:10:25] Accepted 0010933c Diff 3.95K/2 BLOCK! ZTX 0
[2013-12-19 13:17:42] Accepted 00132d1f Diff 3.42K/2 BLOCK! ZTX 3
[2013-12-19 15:31:02] Accepted 0009c30d Diff 6.71K/2 BLOCK! ZTX 1
[2013-12-19 15:40:56] Accepted 00162787 Diff 2.96K/2 BLOCK! ZTX 2
[2013-12-19 18:07:40] Accepted 0000b15e Diff 94.6K/2 BLOCK! ZTX 1
In fact I can't see any instances of a block being accepted in the log when the prior share was rejected (high-hash). Though there are a couple of instances where a block is accepted normally, then the very next share is rejected (high-hash), so it seems it can change mode as a result of a block being found. Confusing.
PS. A few HW errors have crept into that log file (the nonces that don't start 00), it seems they don't get properly filtered out before submission.
PPS. Nope, I'm wrong. Those aren't nonces, its hash32[6] (the next to last 4 bytes of the hash), hence the leading 0's. The bit about HW errors still applies though (I think that diff1targ patch broke the filter).