I think you are talking about the cut I put in at the bottom of the
shoulder. This is to make sure there is nothing interfering with the
chuck against its mating surface.

It also worked well becuase when I cut the shoulder, I left it about
..015 oversize, cut the relief, then I machined the mating surface
perfectly flat, When I came back and turned the shoulder to the right
size, I stuck my bit into the relief making sure not to touch the
mating surface, and I was able to machine a nice surface without any
lips for the chuck to catch on.

I am sure someone else can explain it much better. This was the first
time I have done this. I found an article that explained it very well.
This is what I used to make mine.

http://www.lathes.co.uk/latheparts/page7.html

I guess the spigot is what people are referring to as the shoulder.

I did use one of my micrometer standards in the chuck, and it showed
the same runout as the chuck body did.