Steve Fornelius' Indicator Attachment

“Here's what I made so that I could mount my dial indicator on the headstock arbor. Using this I'm able to get the variance of the milling attachment to less than .001 easily.
The unit is simple to make: Use a blank arbor, drill halfway through with cut down 1/2 inch drill (available at any hardware store. I drilled and tapped a 10-32 hole to take a SHCS. Since you're not turning on the lathe with this in place it isn't important how long the screw is.
For the holder itself, II used a piece of 1/2" 12L14 stock about 3 inches long. I used a 3/8" mill and the milling vice to cut down both sides so the finished size is about 1/4" thick. The reason for this is to allow the dial indicator plunger and dial to clear the holder.I drilled a 1/4" hole in the end.
To use this, mount the dial indicator with 1/4-20 bolt and nut, then slide the holder into the adapter.and tighten down the set screw. Screw the adapter onto the headstock arbor. Put the work piece into the milling vice and move the cross slide down so that the indicator goes around at least once. Crank the cross slide until one side of the work piece is indicating and gently tighten the rear milling adapter screw. Crank to the other side of the work piece and note the difference in readings.
Then I simple twist the milling attachment so that the indicator reads 1/2 the difference. I keep moving the cross slide back and forth, adjusting out the variance until there is no movement of the indicator needle. Then I tighten down both milling attachment screws evenly and recheck the variance. The first couple of times you will probably need to loosen the screws and adjust again, but it works better than any other way I've tried. I can get a repeatable 0.0005 cut on the milled pieces when cutting grooves.”