Indicating the hole is only 1/2 the battle. You need to be sure the quill is pointing straight and parallel to the bed and HS also. Lock the TS down to the bed move the quill out all the way and lock it. Mount a mag base on the compound and put the indicator on the side of the quill. Then and move the saddle and indicate to see if the quill is parallel to bed ways. Then do the top. These procedures are in the post I mentioned earlier.
If the quill is aligned then turn a center down in chuck ( or HS taper) and put your reamer in the quill slide the TS with reamer in it putting the reamer center hole in the chuck center. Lock out power, Put the head in a low gear speed or locked position so the spindle does not turn. (pull the breaker, no power / locked out!.) Then put a wrench on the reamer square and with slight pressure maybe 1 / 16 inch turn on TS wheel, not distance of travel but diameter of wheel after it is tight against the tapered hole. then turn reamer slowly 2 to 3 times by hand.
It should pull it self in and should only take a little bit to clean a spun burr. Be so careful not to turn it n to far. Maybe .005" tops should do it. You need to check to be sure the reamer does not hit or bottom out in the bottom of the hole before hand. Look in there with a flashlight. Some quills are hardened and need to be ground. I would suggest finding a shop with ID grinders. Neither of you say what kind of machine you have. Also I never use a Drake Indicator as I find they are not accurate. I know many hobbyist love them, but I am a professional machine builder / rebuilder and do not use them as I have seen several people who have used them get the wrong readings.
WARNING:
DO NOT CHUCK REAMER IN CHUCK AND USE POWER AS THIS CAN SUCK THE REAMER INTO THE QUILL AND RUIN IT OR HURT SOMEONE.
TURN OFF POWER TO THE MACHINE and LOCK IT OUT.