The 27-year-old moved to Plainmoor in February and the club's current five-game unbeaten run has coincided with the five games that Racchi has started.
"He's got a great attitude, he wants to win, he wants everything badly because he's not been playing regularly for a few years," Nicholson told BBC Devon.
"He feels like he's got a point to prove and a career to save."
Racchi was released by National League North side Tamworth in December, having begun the season at Halifax.
Torquay are still three points from safety with a game on hand after a 0-0 draw with high-flying Braintree on Tuesday.
"He's been solid since he came here," added player-manager Nicholson, who has not featured in a league game since the Gulls' recent good form began.
"He's got a calming influence on the ball, that was one reason why I felt the time was right for me to come out of the team because I always like to see that as part of what I bring.
"Well Danny does that from the middle of the pitch now, so I can have dynamic full-backs now in the two that we've got and it's made a real difference."
Torquay United midfielder Danny Racchi is "playing to save his career", says Gulls manager Kevin Nicholson.