progress report.
The guy who sold it to me is a friend and had never set this lathe up....he didn't pick up on the 10 thou of end play in the spindle! He freaked when I told him, offered money back, pay to fix, etc .... but I really like this lathe so in I went.
Fortunately I found the problem and got it all work, not a 10ths runout on the spindle or the collets! (videos below).
As I hadn't been the one to take the unmolested lathe apart, and it was fairly complex, I really didn't know what was wrong or what to look for. I measured everything and basically reverse engineered it, working through the bearing system and its preload arrangement. Eventually I figured out the bellville washers, were suppose to be creating preload on the outboard race of the AC's and the previous character had oriented them incorrectly. Man, like days to get there as I took it slowly and did several trial assemblies.
I got it back together and the run out is unbelievably low. less than tenth....and check out the collets...hardinge x 64ths. Lathe with collets was on kijiji, not some insider deal (just turns out I the guy well). whole package in the low 2's.
Here's a couple of videos showing the agony of defeat and the thrill of victory
Oh no!
Yes! (spindle (non)runout 1:06, runout with collet 4;05)