MY APOLOGIES.

This was all due to a bad R8 3/8" collet, not the indicator.

I was using an untried R8 collet that came with an old machine. Looks like
the previous owner ruined it and just put it back in the set.

I 3-jaw chucked the indicator in the lathe, and the TIR was only 0.001,
within the chuck's holding error.