That's pretty much how I do it, but for this part - not following what you mean here at all:
You've already put the spindle on center, so what is the DTI doing? I need another cup of coffee...
The edge finder is only good to a thou or two (more if it's a cheapo). Then when you consider another possible few thou of lost motion (lash) in the axis move, plus any uncertainty in the diameters, the tolerance stackup could be more than you'd like for precision work. If you have a DRO, lost motion isn't so much an issue, but even using the brand new Bridgeport's at work with DRO's, I find that centering can be improved upon by the method I described...
I'll try to reword it to be clearer...
1) Chuck up edge finder. Find an edge, then raise the quill.
2) Zero the mill dial.
3) Move the mill 1/2 the workpiece diameter plus 1/2 the edge finder diameter.
4) This will put you very close to on center. If you want better, then move onto step 5.
5) Chuck up your DTI.
6) Turn the DTI so the face is either directly towards you or directly away from you. The goal is to find the maximum point on the
side of the workpiece.
7) Lower the quill until you get the most DTI deflection. This is a point tangent with the OD of the part on the Z axis.
8) What we don't yet know is if the DTI was really set with it's swing axis 90 degrees from the workpiece axis. So, by rotating the spindle back and forth, the DTI probe will move in an arc. By finding the minimum point, we know for sure the DTI probe axis is positioned perpendicular from the part centerline.
9) Now we have a reference point, so zero the indicator (or note the reading).
10) Raise the quill.
11) Repeat steps 6 through 9 with the DTI facing the other way. If the DTI no longer reads zero (or the same reading it did from step 9), you know you weren't exactly on center.
12) Make adjustments and repeat until you measure zero on both sides of the part.
13) Machine away...
Does that make sense? I wish I had time to make a video... It's hard to explain with diagrams or a video. This was explained to me a number of times but I couldn't figure it out until I was shown the technique in practice.
Remember, if a hole isn't spotted first using a spot drill or a center drill, the drill bit WILL start off center despite your best efforts to put your spindle over the exact center. Also, an incorrectly sharpened or an el cheapo drill bit can drift during the drilling yielding a cross hole that's right on top, but comes out off center on the bottom.
John