The leadscrew and half nut of the machine will determine when they can be engaged. Because of their accurate form and dimension the pair can only be engaged (come together) at certain points. So depending on whether you are cutting even, odd, 1/2 thread, or multiple of leadscrew (typically 8 TPI) will determine when to engage the half nut based on the dial indicator.
A good reference for this is:
How to use a lathe
Even number of threads: Engage at any graduation on the dial
Odd number of threads: Engage at any Main division
Fractional number of threads: This would be like 11 1/2 TPI. Engage at any other main division 1 & 3, or 2 & 4. For other fractional threads, engage at same division every time.
Threads that are a multiple of the number of the TPI of the Leadscrew: Engage at any time that the split nut meshes.
The compound should be set at 29 degrees for 60 degree thread. "Cutting threads with the compound rest at this angle allows for the left side of the tool bit to do most of the cutting, thus relieving some strain and producing a free curling chip. The direction is controlled by setting the compound rest at the 29° angle before adjusting the cutter bit perpendicular to the workpiece axis. The depth of cut is then controlled by the compound rest feed handle."
A good reference book is "
The Care and Operation of a Lathe" by Sheldon and "
How to Run a Lathe: For the Beginner" South Bend (This is available in our download section
here)
There are manuals on the Sheldon Users group on Yahoo (I encourage you to join that group), however the manual will not go into the operation of the lathe, only parts.