I think I can take care of all the logic of converting the g-code to step and direction commands, so what i need help with is sending those commands via the serial monitor to the arduino.
First off, Processing can send serial data to the Arduino with no problem. The serial data, though, does NOT go through the Serial Monitor. It goes DIRECTLY to the serial port that the Arduino is connected to.
There are examples provided with Processing that specifically deal with sending data to/receiving data from the Arduino. Have you tried any of them?