Please remember that this is a S1STD with a CNC retrofit done by Bridgeport. It does have a belt drive and dovetail ways. What shape are the ways? How tight are the gibs? What way oil are you using?
My way of setting backlash: Lock the knee.
Increase the backlash by .003 inches. Cut a inside circle with a light cut. Now run a dial indicator around the inside. You can measure each step and know exactly how much you have to take out (reduce) the backlash of each axis. If you do not over comp the backlash it is difficult to measure a flat. Also dynamic backlash is different from static backlash.
By the way, the older box way Bridgeort VMC had stiction to the tune of .001. I would increa. se the oiling for the first year to minimize/overcome this. Once well broken in the oiling could be dailed back.