I don't think I can help you find the issue through the internet. But I do not think your lathe is scrap. I think just about anything on a lathe can be repaired. Although time and money are the limiting factors.
#4 is a clamp style gibb, the bolts clamp the gibb strip to the underneath of the bed, if you can clamp up the gibb tight enough to prevent the saddle from moving it can be loosened off and adjusted via shims till there is no movement but still give a smooth travel.
However, the section under the bed needs to be smoothed off and probably scraped to get it flat with no high spots.
The drawing doesnt show it but there is another gibb strip at the front of the saddle in line with the saddle clamp.
The same process can be applied to that one.
You may find it better to make new thicker strip with a raised edge which will clamp the underneath of the bed then the shims can raise the clearance
That saddle has no Gibs and no adjustment.
The caps are there only to keep it from lifting .
Check the clearance between the way and the cap with a feeler gauge.
A well built machine will have aprox. .001-.0015 clearance. If you can get more than that then you can assume that is aprox how much is worn off the back of the saddle.
Point being the slide is worn out and only further investigation will tell you how bad the situation is....a great learning experience. Take lots of pictures
Sorry to be so late to the party but I'm just getting back to the forum.
The Compact 8 saddle is held to the ways/bed by the bolts up front and a nylon shim (part 4) at the rear. That nylon shim fits tight to the underside of the rear way with zero clearance. It is there to eliminate any lift of the saddle under load.
If you have movement when you manually lift the saddle from up front, check that all the bolts that hold the saddle/apron assembly together. Each should be snug, not overly torqued down super-tight. Then check to see if that shim at the rear is intact and not worn. That is all there is under there.
If the movement is coming from the cross slide on top of the saddle then you need to adjust the cross slide gib. Loosen the gib screws, pull the cross slide tight to opposing dovetail and bring the center gib screw into gentle contact with the gib. Do the same to the other gib screws, making sure each is tightened about the same, and then lock them down with their nuts. Check for zero play in the assembly and you're done.
Emco lathes do not require excessive torque on anything. They rely on superb machining instead of force.
on my 9x20 I used thicker clamp plates that were machined down to give a raised section along its length that pulled up to the bottom of the bed that I had scraped to produce an even thickness along the section where that raised length ran.
Now the clamp could be pulled tight and actually lock the saddle.
By adding shims to the machined section the pressure against the bottom of the bed can be adjusted to leave a smooth travel with zero lift.
I did the same for the front clamp.
The saddle now moves very smoothly the full length with zero lift either from the front or rear.
I also had to scrape the saddle to improve its action and get full contact