Lost motion/backlash...gonna have to dive in.

[TurboStep]

... I read the diameter at .246 though it's a .250 tool. At any rate, this could account for a 8 thou off diameter, but glad it read same on both axis.

Are you sure???

... it is odd that the one axis that exists ABOVE the oil reservoir is the one that they didn't put the check valve on? ...

They did. My late Series 2 1100 has restrictor/check valves on all lubrication points. The 1100's have 12 restrictor valves whereas the 440 would appear to have just 9.

Sticky bellows are going to be a nightmare to keep clear of chips - this might even accelerate the wear. I would certainly recommend a flap similar, but wider to the Tormach chip flap.
Step

[Tigster]

I'm actually leaving the tool at the size I'm reading it, I can live with a thou. and good/bad .246 is what I read the tool as.
The WD40 took away all the tackiness and I have protectors (shield at bottom, sheet of heavy clear plastic bag with magnets holding to column and to table) It can expand and contract, so they are both completely covered. If I have any issue, I'll just replace it.
I was wondering (maybe if I replace any of the bellows), that spray paint that you can put on anything and it becomes hydrophobic, paint them down with that....I assume everyone is familiar?
https://www.neverwet.com/

[TurboStep]

I'm actually leaving the tool at the size I'm reading it, I can live with a thou. and good/bad .246 is what I read the tool as.
The WD40 took away all the tackiness and I have protectors (shield at bottom, sheet of heavy clear plastic bag with magnets holding to column and to table) It can expand and contract, so they are both completely covered. If I have any issue, I'll just replace it.
I was wondering (maybe if I replace any of the bellows), that spray paint that you can put on anything and it becomes hydrophobic, paint them down with that....I assume everyone is familiar?
https://www.neverwet.com/

I cautiously asked if you were sure because I believe I get a different result.
I drew it up in Fusion to make it clearer (well that was the idea anyway):



The outside black circle is your 1.25" hole and the larger blue circle represents a nominal .25" tool touching the outer circle. The dashed circle represents the tool path. The inner blue circle represents a cutter on the same tool path but with a slightly reduced size. In this case I reduced it by 50 thou to .20 for clarity. The inner black circle represents the reduced diameter of the resulting hole. As you can see, the hole diameter also reduces by 50 thou.
In your case, with a cutter diameter of 0.246 I would have expected a hole diameter of 1.246" (ignoring all other possible deviations of course).
I would recommend testing with an outside boss rather than a hole. I find a boss far easier than a hole to measure accurately.
Step

[Tigster]

Ah, gotcha. I will do the boss instead. Ultimately I just wanted to know if my machine was capable of running a proper circle. When I bought the machine (used) I hit the ground running, now I'm coming back and cleaning up a bit.