Loosening the saddle lock helped. The rest of the saddle bolts are snugged. The back nylon keeper plate seems to have a very slight groove (really just a few scratches that you can see if you catch it in the light) where it mates to the ways, but seems to be very close to 'even' with the bottom of the ways where it seats.
The carriage moves much much better than it did when I got the machine, as i have made a lot of improvement on the rust on the ways. I will continue to work this down with fine steel wool and the scotchbrite. I would say it is very usable but maybe not quite as free as it sounds like it should be from the comments here. It helped alot when I got the oilers free'd up was able to get some way oil in there.
Tried to power the machine yesterday with a Phase A Matic 8-12 HP 600 HD. It would power the lathe but we could not get the red light to go out on the Phase A Matic, which is only supposed to light when the motor is getting up to speed. The electric motor also sounded pretty loud when it ran. I am hopeful the proper sized Phase A Matic will remedy all of this. The instructions specifically said to not oversize the Phase A Matic. We are regrouping and going to get a smaller Phase A Matic - hopefully soon!