A model for plasma/neutral fluid interaction was developed and included in the implementation of non-linear MHD equations to a new code framework. The source rates of ion, electron, and neutral fluid momentum and energy due to ionization and recombination are derived using a simple method that enables the determination of the volumetric rate of thermal energy transfer from electrons to photons and neutral particles in the radiative recombination reaction. This quantity cannot be evaluated with the standard formal procedure of taking moments of the relevant collision operator and has been neglected in other studies. The plasma/neutral fluid interaction model was applied to study compact torus (CT) formation in the Super-Magnetized Ring Test (SMRT) and Spherical Compact Toroid (SPECTOR) magnetized Marshall guns, enabling clarification of the mechanisms behind the significant increases in CT electron density that are routinely observed well after formation on the SPECTOR experiment. Neutral gas, which remains concentrated below the gas valves after CT formation, diffuses up the gun barrel to the CT containment region where it is ionized, leading to the observed electron density increases. This understanding helps account for the exceptionally significant increase in temperature and the markedly reduced density, observed during the electrode edge biasing experiment conducted on SPECTOR. It is thought that edge fueling impediment, a consequence of a biasing-induced transport barrier, is largely responsible for the observed temperature increase and density decrease.