Configuring BLTouch with Marlin firmware
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For security reasons, you cannot move Z until home position is applied to X, Y and Z.

With the level sensor attached, we need to home X and Y, and then Z will be homed in the middle of the bed (as configured). Execute G28 to home all axis and then you shall be able to run 'Z'.

To test that, you can unplug just steppers (with power switched off to prevent damaging the stepper drivers) and move X and Y manually to home position, then just give a touch to the BL sensor (when servo/pin) is deployed to confirm home position.