Bill Schwab wrote:
Steve, Jim,

I'm a master cabinet maker , and my advice is to finish it inside with the
same type of finish you plan on using for the outside . The reason for
that is to control moisture absorption . With the same type of finish in
and out , the wood absorbs equally on both surfaces , and maintains
balanced internal stresses . Leave a raw piece of wood on a (very) wet
surface and you'll understand ...

And for a machinist tool box, what would you personally recommend for a
finish?

That's the real question. I would rather destroy a box I made largely
for practice than do any damage to my collets. FWIW, the box that came
with my starter endmill set has some kind of varnish on the outside and
bare wood inside. I lean toward oil finish, but have some concerns
about it or anything more modern being in contact with oily collets.

Bill

If you want traditional, go with shellac. Nothing in that that will
react with metal or attract moisture. I've used Deft's Clear Wood
Finish, which is a lacquer modified for brushing. You can also get it
in a spray can but it takes a lot of spray to build up a good finish.
It also dries quickly. I've had a case I made out of luan door skin
finished with Deft for over 20 years with my Starrett combination
square inside, no rust, no ill effects and the case still looks good
despite some rough knocks. One thing about either of these is that
surfaces can be touched up and the new finish will bond to the old with
no problems, not the case with polyurethanes or some spray enamels.

Stan