This afternoon I decided to try Clive's suggestion about old oil gumming up. I think things are now a little easier on the operation of the tailstock but the squelching/squirt noises are now worse to the point that I can feel additional resistance on the hand wheel when winding the barrel back into the body.
To cut a long story short I eventually found that if I remove the middle oiler on top of the tailstock and cover the hole with my finger I can get a significant pop if I wind the the barrel back in fast enough, like a cork out of a bottle. With my finger removed the barrel moves without any noises, so it would appear to be that everything is quite close fitting and the air is indeed being compressed and squeezing past the oil to make the noises.
Thanks to all for your input and ideas.
Incidently whilst I was doing this I was referring to the Myford handbook and inside was a price list for Myford lathes when my father ordered it in 1972, a Super 7 with Norton gearbox and the basic tooling as supplied less motor -£274!
Phil