I presume that the bearing sleeves on the big countershaft
(Lathe7) fit to the support frames (Lathe8). I would guess that the
original plan was for the motor to sit between the two I-beam
sections, with its shaft sticking out through the hole to the right
(probably to the left when properly installed on the lahte), and a
smaller pulley on the motor shaft is V-belted to that gigantic pulley
on the countershaft. (it could also accept a larger motor on the
"arms" extending behind it in the photo.) I think that the intention
was to mount it to the wall behind the lathe, with the "arms" pointing
down (which would allow the motor to be between the mounts, with the
pulley sticking out to the left where the big pulley would be.

No, I think one of the arms gets bolted flat against the end of the
bed, and the other underneath (so that the pass on either side of
the legs), to put the countershaft directly behind the spindle, and
the motor mounted under the countershaft, as you say. I'm guessing
the countershaft was removed from the bearing brackets so that the
assembly could be removed without disconnecting the belt.

Just curious, what's the spindle thread? 2-1/4 - 8?

--Glenn Lyford