I know this is elementary for you, however, let’s take a few small elementary steps.
I like that approach

1.) Just to confirm. I see the Kanalog DAC outputs on the board at JP11, So I would be connecting X,Y,& Z axis drive Pins (Red, pos. Leads on the old controller connector) to the JP11 pins 0,1,2 respectively and the Neg. Pin (black lead old controller connector) to JP11 GNDs.
Correct

2.) The old controller connector will no longer be connected at all or I only cut the first two wires on all three axis connectors and still keep the connectors connected? I am assuming this connect will no longer be connect on the drives.
Only change the first 2 wires. I don't believe the other wires go to the old controller. The tachometer wires come from the tachometer on the motor. The drive needs that to know the motor speed so it can control the speed of the motor to what is requested by Kanalog. I think the other wires have to do with enabling the drive. You will probably want to keep those as well.

3.) I do not know what pins are the Encoder Signal Pins on the drive board. I cannot discern the drive schematic at this point. Can you please advise?
The Encoders are shown on page 3 of the schematic and shows how they were connected to the old controller. There should be shielded cables coming from the encoders which are mounted on the Drive motors or on the lead screws of the machine. You will want to disconnect them from the old controller and connect them to Kanalog instead. The +5V that power the encoders is probably best to now be driven by Kanalog rather than using the old controller's +5V mainly because it will make cabling easier.

4.) I did notice on RickB's J325 retrofit drawing schematic (page 2), he had used a custom board. Will this be needed?
RickB's encoders had single ended outputs rather than differential outputs required by Kanalog's differential encoder inputs. So he needed a converter. Yours seem to be differential (they have both the + and - signals). So yours should connect directly. You might read this:
Dynomotion Motion Control Boards for CNC Manufacturing and Robotics Applications

5.) When using shielded wire ... is on one end grounded to the GND on the Kanalog board?
The general rule is with cables that carry signals (not power) the shield should be connected to the DC GND of the listener (receiver/input). So with the analog signals coming from Kanalog (or the Tachometer signals coming from the motor) the shield should be connected to the amplifier DC GND. The Tachometer already does this. For Encoder signals going to Kanalog, the shield should be connected to Kanalog DC GND

HTH
Regards