UPDATE:
During a cleaning of the lathe, I noticed that the head for the X axis was not parallel but it was perpendicular to the scale along the length. There was about a 1/32' gap at one end and I could just barely get a 0.002 shim in the other end. Maybe I didn't tighten the bolts securely during install, maybe vibration loosened it, don't know for sure. So I realigned it leaving a 0.005 gap between the head and scale along it's length and, during recalibration, discovered that the readout number was exactly 5080. This forced me to check the Z axis and that one too was not aligned correctly. With the Z axis being under the carriage and out of reach, I went with the measurements in the instructions when installing. Well, this was a big mistake. The head was tilted about 2-3 degrees to starboard looking from the tailstock end and was rubbing along the scale on one edge. Once this was corrected (after many trial and error fittings) also got a 5080 reading during recalibration. I was suspicious about the gap between the read head and scale earlier on in this thread and this confirms my suspicions - the head needs to be absolutely parallel and perpendicular to the scale and as close as possible without scraping, as JFL4066 said. Perhaps 0.005 is not enough or too much but I can't argue with the results. I checked the calibration 3x and got the same number each time - this was another issue before, different readout numbers each time I calibrated. Now there is consistency and I feel confident that I'm in a good place. Very happy that I didn't start my project before discovering these issues.
Again, thank you all very much for your time , knowledge and patience.
Michael.