You guys have a way of complicating an easy task! Insert a drill chuck in the MT holder, and with a center drill or spotting drill approach the rotating workpiece with the drill, and by eye, center the tool on the center of the part, both vertically and horizontally and take a little peck at the part, it is quite easy to find center without indicating; this is the way I learned to do it over 50 years ago. It goes without saying that the holder needs to be aligned with the center line of the lathe, this I do by placing the holder tightly against the face of the chuck, while tightening the tool post to the compound rest. Another way to semi align the holder is to insert a tool into the taper that has a good center drilled hole in it's small end and running the tailstock center up to it, noting and correcting vertical and horizontal misalignment and correcting for it; this can get you quite close, if the holder is in good alignment with the lathe axis, then going to the first method for possible final adjustment.