It has been asked and answered many times, unfortunately the search function in this site is rather iffy.
Anyway here are my suggestions, just my opinions, your mileage may vary.
Lathe: ex industrial Colchester, Boxford/South Bend, Harrison, Standard Modern. (NOT Myford). 3 jaw self centreing and 4 jaw independent chucks are a must, a faceplate is a good thing to get.
Mill: Bridgeport, Taiwan-made Bridgeport clone, Tom Senior, Elliot, Rong Fu Taiwanese 9 x 20 mills (note- RF Mills with keyway in round column are rare but best, but if you can only find a round column one without keyway, you can easily modify it as I did mine with a second column to maintain alignment when moving the head) Be sure to get R8 spindle rather than Morse taper spindle.
Any imported drill press as long as there is no play in the quill when fully extended, and table is adjustable in all directions. 1/2 HP motor is about the smallest I would go for, and a 0 to 1/2" chuck capacity is useful. A smaller sub-chuck can be used for small drills if chuck will not close to 0.
Also a complete 115 pc set of fractional, number and letter drills is a good investment.
Any imported grinder will do if it will use 6" wheels without causing an earthquake. Ask to see and hear it run. If quiet, it will be fine.
Files – Nicholson make an excellent set of 6" warding / small work files. That and two 10" mill files, one for brass only (paint the tang end yellow) and one for steel and alum is a good start. Be sure to buy or make and fit handles to all files- this is not optional it is a must. Plastic are OK, wood feel better in your hand but are more money.
Centre punch, 4 and 6" squares, 6 and 12" stainless steel rules, a 6" digital caliper, 6 oz and 1 lb ballpein hammers, a wide point magic marker, a deburring tool, assorted emery cloth or sandpaper in 80, 120,220,400, 600, 1200 and 2000 grits is a good start.
Choose a thread system to work in (metric, or UNC/UNF, or BA / Whitworth) and get some good quality high speed steel taps (spiral pointed taps are best – they have a special groove that causes the chips to self-clear beautifully) and dies in various sizes. I personally like Clarkson/Osborne Blue Wizard spiral pointed HSS taps. They are the sharpest and longest lasting taps I have found. Butterfield's are as good but hard to find now. Used taps rattling around in drawers and boxes at sales are usually dull and chipped – don't be tempted the bargain prices of such rubbish – get new, get quality taps and dies. If it saves you breaking just one tap in a workpiece you have hours into, the higher cost will soon be forgotten.
Also buy some good quality cutting oil – like TapMagic – this will work wonders for parting off in the lathe and for drilling and threading. Cheap small paintbrushes or acid brushes are a good way to apply oil.
A good broom and dustpan, a hand brush for cleaning off machines, and a galvanised steel trash can with a lid are also a must for a shop that will remain pleasant to work in.
A fire extinguisher, and a smoke alarm that alarms in the shop and in the house are good investments.
JD
Edited By Jeff Dayman on 08/01/2013 19:36:33