now i feel stupid. i didn't even catch the fact that you had .005 of run out in your first post. that is alot and with the extra little vibration that could be the source of your problem. i have a wolfgang spindle and have not had any problems yet. and it/was around .0005 i have not checked it lately.
Rob
Sorry to be late to the party (If all you CNC people would stop ordering stuff I would have a lot more free time).
Propaganda, .005" is a lot of runout for PCB milling (our v-tip cutter tips are that big) and is at least part of your problem. I have only seen a handful of colts with that much runout using our collets. Has there been any damage to the colt or the collet? If you put the collet in the router taper without the nut and try to move it back and forth does it wobble or seat firmly in the taper?
John Torrez
Think & Tinker / PreciseBits