Right just tried it with my 280 which although not quite the same gave more movement when the screw cutting lever was used than when the lateral feed lever was used.
Basically the gear train as you have said will give 0.127of a turn input into the headstock gearbox per 1 rev of the spindle. Selecting "C" will give a 2:1 reduction comming out of the box into the lead screw so 0.0.0635 of a turn .
With the 8 tpi spindle you will get 1/8" (0.125" )travel per turn of the leadscrew therefore 0.0635 x 0.125" = 0.008" when the carrage is driven by the leadscrew which is what you have measured
As I mentioned above the carrage can either be moved by engaging the half nut onto the leadscrew (righthand lever) in which case it will move teh 0.008" per spindle turn.
OR there is a permanently engaged wormwheel which via assorted gears drives a shaft which has a rack cut in one end. This rake is driven by a pinion on the feed lever (black or metal knob, middle of apron) so when the lever is raised the drive shaft engages with other gears that drive the cross feed leadscrew. When the same lever is lowered the rack moves the shaft the opposite way and engages with gears on the handwheel shaft which in turn move the carrage along via the large rack screwed to the front of the bed. These gears give the further reduction in movement that you desire.
From a 250VF manual

You can also see from the parts diagram in the pdf manual of the apron how the half nut is engaged by the R/H lever and the feed lever engages the gears.
J
Edited By JasonB on 13/03/2017 18:38:29