Sorry for being away after my question and thank you for all the nice answers.
I assembled the lathe back together today - no it wasn't that much appart only the subjects in question.
As I wanted to try my "luck" with the great "DCGT 07 02 04 - ALU UK 410" Jason suggested a while back to another member in another thread. I had to mill my new holders first - say what
- Ahem, I could see that my quick-change Tool-Post accepts 16mm. holders and the bigger the fewer vibrations chatter etc. - But did I check that this would mean them seated in the right height ...
This operation really showed me the truth of one of the first answers to my question, as the holders are made from tool-steel. Using an 10mm. Four Flute HSS End Mill, I tried with a 0.5mm. cut and the mill literally bend and did other not nice movements
It took me some time to know exactly how hard the collect for the Mill Bit needs to be tightened (a lot), but I ended up with a 13mm. high holder and this allows for a cutting edge being 0.5mm. lover that the centre -> enough adjustment.
I made sure I got it up to very close to centre height before testing the setup.
During assembly I also discovered that the DRO is part of the problem - to a degree ....
When I installed it first time on the lathe, it worked fine - BUT it rendered the Tailstock useless
So I moved it down below the whole Bed - It is out off the swarf as long as I empty the tray before it has more the 5cm. / 2" off swarf - and it can't be filled with what drops down from above.
This means that I had to make a few 'adapters' that are screwed together and onto the Cross-Slide.
I knew that it can be bend a bit, but haven't thought much about this until reassembly, where I noticed that the glass-scale has a certain friction.
This I found to mean that the DRO will decrease the diameter on the display between 0.01-0.02mm. after the lathe begins to vibrate. Starting the lathe before setting the cut depth reduced this to 0.01mm. -> so there is room for improvement with a better adapter.
My first test piece was a Ø 7mm. piece of scrap alu. I aimed for 6.0mm. in my first attempt and got 6.014mm. - not bad. So I tried to let it cut again without touching the Cross-Feed Handle, and I can attest to Jasons claim - it can make swarf so fine it floats in the air, but it removed around 0.003mm. per pass until I got to 5.997mm.
I tried to go for 5.0mm. and got 5.011mm. as first, but this time I ended at 5.003mm. after a number of 'No Cut' passes.
Both test on this piece looked awful to the eye - but my fingers or nails can not detect anything but a smooth surface
OK - this isn't bad - next test with some of the 32mm. alu I have plenty off. I took it to all the whole numbers, 32, 31, 30, 29, 28, 27, 26 as my Micrometer is a 25mm. they were all measured with a caliber and I couldn't detect any difference from the required diameter.
The aimed 25.0mm. measured to 25.032mm. so the 'No Cut' approach wasn't enough, and I had to try a small adjustment and I overshot it a bit - 24.980mm.
Next a try at 24.750mm. - a bit better at 24.740mm. - 24.500mm. became 24.506mm. in first try and after two 'No Cuts', I ended at 24.497mm.
All the cuts in the 32mm. alu gave a fantastic surface - mirror finish and fingerprints looks like mountains on the surface
Does this means that all my problems (with the lathe) are over - no I do not expect so - but now I'm getting to a point where I should be able to do part I will be happy with
Dave - I like your suggestion about testing with some steel - but all the stock of steel in my stash is scrapobinium - with the exception of some very high tension steel bolts I bought for making crankshafts from - so I'm not sure that I will get the result you ask for.