The 27-year-old moved to Plainmoor in February and the club's current five-game unbeaten run has coincided with the five games that Racchi has started.
"He's got a great attitude, he wants to win, he wants everything badly because he's not been playing regularly for a few years," Nicholson told BBC Devon.
"He feels like he's got a point to prove and a career to save."
Racchi was released by National League North side Tamworth in December, having begun the season at Halifax.
Torquay are still three points from safety with a game on hand after a 0-0 draw with high-flying Braintree on Tuesday.
"He's been solid since he came here," added player-manager Nicholson, who has not featured in a league game since the Gulls' recent good form began.
"He's got a calming influence on the ball, that was one reason why I felt the time was right for me to come out of the team because I always like to see that as part of what I bring.
"Well Danny does that from the middle of the pitch now, so I can have dynamic full-backs now in the two that we've got and it's made a real difference."

Flight AF953 was travelling from Malabo, the capital of Equatorial Guinea, to Douala, Cameroon's largest city and commercial capital, when it hit bad weather on 2 May.
While avoiding storm clouds, the plane came close to hitting the 4,040-metre (13,254 feet) Mount Cameroon.
French accident investigators BEA have now opened an investigation.
The Boeing 777 aircraft had 37 people on board as it made the short journey to Douala, which is around 100km (62 miles) from Malabo.
It was due to arrive in Cameroon to pick up more passengers before continuing to Paris.
After diverting north to avoid storm clouds shortly after 21:00 local time, the plane's new route to Douala took it directly towards the mountain.
An initial incident report published by BEA said an automated warning, saying "Pull up", was activated. The plane then ascended quickly from 9,000ft (2,743m) to 13,000ft (3,962m) to avoid a collision.
BEA did not say how close the plane came to Mount Cameroon.
The flight landed 44 minutes after leaving Malabo, and no-one was injured.
Air France said they were conducting an internal investigation into the incident.

Steven Frater, 32, hid 167 diazepam tablets and quantities of heroin and oxymetholene inside his body.
He then stole a television from the Asda store in Galashiels, hoping to be arrested and sent to Edinburgh Prison.
Frater, formerly of Jedburgh, admitted at Selkirk Sheriff Court the theft and refusing an internal examination at Edinburgh Royal Infirmary in February.
The court heard he attempted to defeat the ends of justice by refusing to be examined in hospital knowing he had the controlled drugs inside his body.
However, he was subsequently found to have swallowed a number of substances that he had hoped to distribute in jail.
Sheriff Jamie Gilmour sentenced him to three years in prison for the offences.
Torquay United midfielder Danny Racchi is "playing to save his career", says Gulls manager Kevin Nicholson.
[NEXT_CONCEPT]
An Air France aeroplane narrowly missed central Africa's highest mountain in early May, French investigators say.
[NEXT_CONCEPT]
A man who swallowed a large quantity of drugs in order to smuggle them into prison has been jailed for three years.