Grit is death to machine tools. Keep the gritty tools far away from lathes, mills, etc. If you plan to use a passive sealed enclosure for the VFD, check the manual for the manufacturer's recommendations. Passive enclosures need to be quite a bit bigger than ones with through flow air or recirculating air. Mark's idea of using a heat dissipating back plate for the VFD is a good one, just make sure the plate can effectively dissipate the heat into the room. Trapping it against an insulated wall, for instance, would not help much.