480v delta/400v wye with Neutral ungrounded
The manuf. insists that the neutral must not be solidly grounded. I
  believe this creates an unstable electrical environment for the
  machine electronics also, it creates a shock hazard under ground fault
  conditions. Am I thinking correctly on this?


You don't use neutral for grounding. You use the protective earth, PE or earth point for grounding and, if you are conscientious, use an RCD on the circuit (GFCI in North America and elsewhere).