Well, you would think the tap would just follow the hole. So I reckon first up I would be checking if the hole is drilled straight by drilling a hole and sticking a neat-fitting plain rod into it and see if that runs out of true when you rotate the chuck. If it does, then you have maybe a tailstock alignment problem. Or maybe a headstock bearing loose problem. (Did you check for headstock bearing play?)
If the drilled hole is true, it must be the tap going in crooked, which must be down to tailstock alignment, you would think. But if your lathe is turning parallel between centres, that seems odd.
However, if your ML7 is a narrow guide model (pre 1971) they can wear quite a bit on the rear vertical surface of the front way, which also is the surface that guides the tailstock. Max wear seems to happen that few inches from the headstock end of the bad, right where you have the tailstock when using a tap wrench. When using your test bar between centres however, the tailstock is probably further to the right, in the unworn section of bed so gives a true reading.
You can measure wear on that surface with a 1 to 2" mike from the front of the front shear to the back of the front shear. Or just feel/measure shake between tailstock base and bed at the far end of the bed vs the headstock end. A small amount of wear hear allows a large amount of movement at the tip of a revolving centre or drill chuck and bit sticking out many inches in front of the base.
If you have wear in this area, it can be remedied by a wide guide conversion and then by using a vertical slide to hold a tool bit to the bed vertical surface while racking the saddle back and forth like a shaper. I have written both these processes up for Neil and they may be published in MEW at some point in the future.
Edited By Hopper on 23/02/2018 08:26:45