We have a basic toggle switch on our bot, wired to the DIO. The switch bridges the power and signal lines, is this how it should be wired?
No.
It should connect ground and signal one way and nothing at all the other way.
+5v power is not used for a basic switch.
On our DS I found that I could not get a reliable signal if I just let the signal line float. You need to hold the signal high through a pull up resistor. Solder a 1k resistor to the 5V line, then the free end of the resistor to the signal and 1 side of the switch. Ground the other side of the switch. When the switch is open you will have a solid High signal, when the switch is closed a good low.