David- you have an interesting instrument here but as with any measuring instrument you have to determine such parameters as repeatability and you have to determine the internal error.
If you take a measurement; then take the barrel off and replace it and re-take the measurement is it the same?
Another potential problem with your design is torquing - unless the aluminum ends are on a flat and level surface (in a machine sense) any slight twist will affect measurement - sort of like a twisted lathe bed.
I bet that if you were to put a perfectly flat straight non-sagging piece of metal between the end pieces and ran your indicator along the length of it you wouldn't get the same reading all along the piece.
By the way, did you mill the end pieces on your drill press also?
It looks like the block that holds the indicator has a square hole into which the horizontal bar fits. In order to get as sliding fit you need several thou clearance just here and that will make for a loose fit and decrease repeatability. That horizontal bar needs to be a precision piece and some sort of semi-kinematic design for the sliding part to maintain precision.
David, I'm not being critical but I've struggled with a lot of stuff like this in instrument design.
