Seems pretty common to have some misalignment, my headstock was out about 0.001" at 6" and at first was a bit hesitant to mess with the headstock (not knowing squat about lathes). When I did my headstock alignment, I used an 18" 1" precision ground bar that was chucked in my 4J independent with 12" hanging out. I used a 0.0001" dial indicator and checked it along the bar at different points. Used the Jog with low gearing and look at the +/- swing from 0, and did the headstock alignment so that it is the same +/- swing at different points along the bar with it dead nuts at the chuck. Turning the chuck manually, one can see some change from the hand pressure. This minimizes the affect of any misalignment from the jaws, but my Bison 4J combo runs very true (slightly better than my PBA). Then check a test cut as Bill did, assuming your chuck turns true. Like Bill, very small tweaking of the head stock alignment bolts is needed. Also make sure you recheck the lathe bed level prior to the headstock alignment.
Most of the precision test bars I have seen are made in India, they are usually listed as something like 0.0001"maximum run out (not sure over what distance, or this is the TIR at any one point)? I would have used a 5MT test bar if going this route, as the 3MT to 5MTadapter can add error as Rio noted. Looked into getting one, but it is aligned fine as is, and anything further than 6" you would probably use a tailstock, which has a much greater affect. Using collets, like 5C, they can be easily be out 0.001" at 4-6". Bill is fortunate to have a big honking chuck that runs very true. Pretty impressive accuracy on Bill's part.
