Did you put the dial indicator on the inside of the spindle taper? Is that where you are seeing runout?
Maybe time to upgrade to a little larger lathe.
No on the largest part of the spindle, but I also put a block of briar in the chuck and there was too much wobble. This lathe has done everything I need. I would like to get the 8x12 but its a lot more money and is pretty heavy. There were no issues until I forgot to tighten the chuck and the block flew out probably hit the bed and bent the spindle before it hit me.....DOH