I see what you were trying to do, very very difficult that way.
I like to bring the indicator in from above - centered vertically (by eye) on the Z axis. Set it on a flat side. Gently rotate the chuck back and forth a bit - the indicator reading will bottom out and start going up again - take note of what number it bottomed out at.
Now carefully pull the plunger of the indicator up to clear the stock (1" stroke indicator is best here).
Rotate the stock 180 and carefully let the plunger back onto the stock. You don't want to be moving any handles or pulling the indicator stand around will doing this.
Move chuck back and forth to get "low" reading again.
Now adjust the chuck to be half way between the 2 readings.
Keep repeating all around the part over and over.
Do not worry about sides 90 degrees apart not giving the same reading. Theoretically they should but stock is not perfect.
You should easily be able to get opposing sides within 1/2 thou of each other.
Sound like a bit of pissing around but when you get good at it it goes very quick.
I have never heard of a tailstock that can be adjusted for runout?
Do you have a set-tru chuck in the tailstock or something?
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