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If the tool is level, relative to the lathe bed,
Another cool thing I discovered is that after you've set the tool height , you can rotate the gauge 90 deg away from you, re-square it and jog the tool in or out until it's at zero again & set the offset in Mach3's tool table. (Or whichever CNC lathe controller du joir you're using).
It's you.
There are many good ideas here for me to learn from. I suspect that in a production shop you face off an end and then raise the tool until the tit goes away.