Locate fewer features with larger tolerance (Linear Referencing)

Hi,

Background
I am using the locate features along routes tool, intersecting a line with M values with another line. Both lines have exactly the same geometry as one was created from the other, but are segmented differently. The line without M values is formed by 70 segments while the other line is formed by one segment. ArcGIS 10.1

Issue
When I use an XY tolerance of 20m as an input for the tool I locate 64 features. When I re-run the tool and use an XY tolerance of 2m I locate 70 features along the exact same route (70 is the expected answer). Does anyone have any idea why I locate fewer line segments when I use a larger tolerance?

Thanks