"Is it correct to assume that the Live Phase is the one with the higher voltage (206 V or so at the breaker box) since the other two phases are almost identical and lower? That is the phase that should be going to the Control Transformer, right?" Absolutely NOT. The phase that is 206 to ground is the manufactured phase, and must NOT feed the control transformer.
" Is it also correct that there is only one phase arrangement (hook up) that is correct?" Yes that is correct, since there are no pictures of the inside of your control box, there are certain things that need to be done in order . Step#1 first then go to step #2 to guide you through the process of getting it connected properly.
1. Please swap 2 phases of your input power, so the speed control motor turns the right way, before there is internal damage to the speed changer gearbox.
2. Verify that the fwd/rev selector on the side of the electrical enclosure is in the FWD position.
3. If the spindle is still turning backwards, this will be addressed last.
4. To get the machine power transformer on the correct phases. I am assuming that you will ALWAYS turn the phase converter off before connecting or disconnecting wires.
A. Disconnect the phase that has 206 to ground.
B. "The T1 control transformer tag states a 220 volt o 440 volt primary with a 115 volt secondary so it must have 2 different primary windings I am guessing."
Yes there should be 4 terminals for input power, wires to the outside two and a jumper between the middle two. Power up and measure the voltage across the outside two, should be near 440 Volts.
C. If you measured 440 on step B, skip the rest of this step, it is wired correctly.
If way less it is connected to the manufactured phase, now measure the voltage at the top of the disconnect left 2, right 2, and outside 2.
Only one of the three readings will have 440 on it. Please post your measurements, and I will tell you how move the wires to get it wired properly.
D. Reconnect the phase disconnected in step A.
E. Check operation, Speed change rotation correct? Spindle rotation correct? Post results.
Bill
P.S. If the spindle motor has 18 leads it is a dual voltage motor. And if the speed change motor has 6 or 9 leads, it also is a dual voltage motor. And you can reconnect them to the lower voltage with the proper instructions. We need to know what you have first.