You can work with a machine with 0.050" of backlash and a DRO but its going to be a pain in the rear. That's an extra half a turn of the handle every time you reverse position. Its possible that the nut may be adjusted or reworked to get rid of some of the backlash, but unless you are getting a great deal on the machine I'd keep looking.
When checking the backlash, check it both at the extremes and in the center, this will show you how much the lead screw is worn. Personally I wouldn't buy a used machine with any more than 0.020" backlash on both axises unless you enjoy repairing machine tools or working on sloppy ones.
Also take an indicator with a magnetic base, put in on the table and indicate on the inside taper of the spindle. Rotate the spindle slowly by hand. You should see less than 0.001" of total runout, and I like it to be way less. Any more and the spindle is either bent from a crash or worn on the inside taper. Spindles can be reground, but figure $300. to $500. to do this.
Run the machine and listen to it carefully, and as suggested above, make a cut if you can. Listen to any abnormal noise from the spindle bearings, which are at the very bottom of the spindle. If its a vari-speed machine, run it through the speed range and listen for any rattles, which shows wear in the vari-speed. This is fixable, but for non-Bridgeport machines parts can be a hassle.
Engage the quill power feed and see if it seems to work. Unfortunately the power feed units on these type of machines are often abused and have worn out clutches. Not to bad to replace on a real Bridgeport, a possible hassle getting parts on a copy machine.
See how much slop is in the quill handle as you switch from down to up motion of the quill (put light drag on it with the lock). Too much slop here makes the machine a pain to use and can cause chatter when drilling. You can get around that by putting a little drag on the lock, but again it makes the machine more a pain to use.
You can also put the indicator in the quill, indicate on the table surface and get an idea of how much the ways on the machine are worn by moving the table back and forth in both directions.
Typically when you find the right machine (used in a model shop or prototype shop, not production) you can tell right off the bat by looking at it that its going to pass all these tests. Those are the machines to find. I learned this the hard way, the first mill I bought as a younger man had been used in production and was pretty beat but I didn't know how to check it back then. I've still got it and use it for "2nd op" jobs but on my new mill I knew what to look for and got a good one.
Good luck-
Paul T.