I then proceed to check the parameters using my Fluke Meters. I want to make sure everything is correct before moving on to testing the Exciter.

First I checked the Voltages in the wires to the motor from the Cap box. My procedure is set the meter up, turn lathe on for a min or so, get a stable reading, turn off lathe, and reset leads, and repeat.
Voltage across T1 and T2 is 238.5. Same as it is from the line to the machine.
Voltage across T1 and #3 is 296.8 this seems a bit high
Voltage across T2 and #3 is 399.9V Ok, this seems quite high with the motor running full speed.
I'm starting to think the Start Cap isn't dropping out. I'm not totally sure yet. The lathe is firing up instantly each time.
I then proceeded to check the amperage on each line from the Cap box to the M/G panel using a Fluke clamp meter.
#3 read 9.5 Amps. Thats bellow the max if 17.11A I had calculated...
I then checked T2 it read 9.6 Amps, ok this is pretty close to #3's reading. It's about half of the value I had calculated for T1 and T2's max amperages of 22.8A. That makes sense I think as there is no load on the M/G
I then proceeded to check T1 and got a reading of 0.1 Amps.

Humm... something clearly doesn't seem right. Did I get the meter properly clamped around the line? I turned the lathe off, reset the meter on T2 turned it back on and got a reading of 9.6A same as before. Ok, meter is working. Turned of the lathe off, repositioned the meter on T1 and turned the lathe back on again. Still reading 0.1 for T1
BAMB! Holly shit what was that, I know have a shit ton of smoke coming from the Cap box. Fu(K! I immediately turn the lathe off, and then run over to the breaker and turn it off! That was quite the experience, especially with my head down there reading the amp meter. I got everything aired out. I then grabbed my meter and made sure there was no voltage left at the Cap box lines. Looks like one of the caps exploded.

I then pulled the cap box out, to get a better look.

Sure enough the Start cap blew. What a mess! I am really glad this wasn't in the main M/G panel! Now to figure out what happened.
Here is the schematic of how I have it all wired.

Here is the Supco Relay Schematic

Based upon this, can anyone confirm I had the start cap wired to the correct terminal for the relay to remove it from the circuit?
I had the Supco Pickup Voltage set to 250V.
PICK-UP VOLTAGE
370 130 310 250 180
Patent No. 5528120
INSTALLATION
1. Turn power off.
2. Set the desired Pick-Up Voltage on the APR dial.
If you don’t know what the Pick-Up Voltage is, proceed as follows: * For equipment rated for 115-120 volts set the APR5 dial to 190.
* For equipment rated for 208-240 volts set the APR5 dial to 350.
(The above setting will satisfy most motor applications. However, the voltage ranges represent averages that may not be adequate for some applications. It is better to set the Pick-Up Voltage ac- cording to the equipment specifications.)
If someone can confirm I have the start cap wired to the correct terminals according to the Supco Schematic, I think my next course of action is to order a new start cap and then do the following:
If you wish to verify the APR5 setting:
1. Place an analog clamp-on ammeter over either one of the two wires from the start capacitor, or the wire from the start winding.
2. Apply power and observe the ammeter.
3. CORRECT SETTINGS: The Pick-Up Voltage is properly set if the relay contacts open when the unit is up to 70%-80% of full speed. Under normal conditions the motor will reach its full speed within 0.1-0.2 seconds. The ammeter cannot react that fast, however you will observe some swing of the needle.
4. If the Pick-Up Voltage is set too high, the voltage on the start winding will not reach the level of the APR5 setting. The needle of the ammeter will swing to its maximum arc and hesitates for 1-1.5 seconds before returning to zero. It simply means that the APR5 automatically opened the contacts after the safety time limit. Turn the setting to the next lower mark. Each mark is about 30 volts. Repeat until the motor and APR5 operate as in paragraph 3.
5. If the Pick-Up Voltage is set too low the relay contacts will open before the motor has a chance to get to the full speed. The motor may not start at all. The needle of the ammeter may swing and return to zero too fast. The relay opens the contacts before the motor has a chance to reach the desired speed. Increase the voltage setting by one mark until the relay and motor operates as indicated in paragraph 3.