I followed the advice you all gave me & checked / tightened / aligned what I
could.

Retesting the x axis gave me the following figures that I'm pretty pleased
with.

DRO Dial Gauge (all values in mm)
0 0
1.003 1
2.03 2
3.01 3
4.01 4
5.04 5
6.03 6
8.06 8
10.05 10


I cut some test holes, a rectangular cutout and some circular cutouts.
Both were within 0.05mm (~2 thou?).

I changed the cutting bit to a 2 flute 1/8" dremel router bit and got a much
much cleaner cut with little to no melting of the plastic and little burr
left on the edge.

Some pics here of rectangular cutout & circular cutouts:

http://www.youtube.com/watch?v=spB26eMLdz0
http://www.youtube.com/watch?v=KJ2cvsCfiL8


Thanks for you help, you can be assured there will be more questions to
come!