Rob, Russels point about any scoring of the spindle socket is worth checking out but it should show in the original chuck arbor if this is the case. If it had spun and picked up in the taper it would show on both items.
I am not familiar with this machine at all and there seems to be no info on the web — might be worth contacting Warco direct and ask if they have anything, exploded diagram, spares etc.
It would be possible for the spindle to be bent in the middle and because it is supported at both ends still show a concentric reading at top or bottom where the bearings are — If you have access to a morse taper test bar [assuming the spindle is morse taper] try this in the spindle and clock at the end of the test bar and on the part of the MT thats showing at the end of the spindle. If there is runout at the end of the teat bar and none at the spindle nose it would suggest to me that the spindle is bent. The fact that the draw bar goes tight every 1/2 turn would also suggest this.
John