I have a Digital Mahr MarCator 1087R, .0001 to 1.0 with an arm mounted to the spindle to reach under the shaft. For the V block setup it is a Girod 0.0001 to +/- 0.0055" test indicator, it does not seem as stable.
One thing I notice is the chuck moves by several tenths as I rotate it by hand, pretty sure its in the bearings I am not sure if that is normal, I have an old south bend lathe with bushings and oil lube so there is some clearance in there for oil, between 0.001 and 0.0007".
I am very happy with how it came out, the bottom of the spindle is about 3 tenths when supported by the journals. The test arbor is about 1 mil TIR near the spindle and 3.5 mils at 6 inches away, about where the end of a drill bit would be. This was close to 1/8" when I got the drill. Thanks again for the most excellent suggestions.
Patience and hard work pays off! Great work! Always nice to see old machines brought back into condition.