I agree with everyone else: I am afraid you are trying to use tooling not designed for the lathe. I don’t know the centre-height of that lathe but that QCTP looks as if it would be too big on a Myford 7.
Don’t go and try modifying the lathe to suit incorrrectly-chosen tools. No-one stocks putting-on tools for when you find you should not have done that. Worse, apart from the question of spoiling the machine’s original form, cutting the slide surface down will weaken the slide.
There is available, and I own, a very basic, commercially-available, small [Fairly-]Quick Change Tool Post that works by a spring action in the block itself. It works, sort of. It fits my EW 2.5″ lathe, sort of; so might fit the Portass if used with 1/4″ square tools, but it’s crude and rather disappointing to use.
Four-way tool-posts have long been common on these little machines – indeed even very large industrial lathes can still be supplied with their own versions, which have an indexing arrangement to ensure rapid, repeatable tool-cycling.
As Howard suggests they are not difficult to make, and if you use mild-steel plates held by 4 (or more) countersunk screws, 1/4″ / 6mm thickness is fine provided you use tools of appropriate bar size. I’d be inclined to use 8 screws of modest size, e.g M6 for a 2.5″ – 3″ square tool-post: 4 near the core block’s corners, the others in line with them and midway between them.
Note that the tooling still needs headroom for height-adjustment shims.
Further to Clive’s suggestion I long ago made a few, simple Armstrong-principle tool holders for my EW lathe (with “clog” tool-clamp as your Portass would normally have), and without needing the milling-machine I did not own at the time.
They are simply short lengths of square mild-steel bar drilled to hold bits ground from 1/4″ dia round HSS. My source of tool material is typically broken or worn out centre-drills, FC3 milling-cutters and the like! They are gripped in the holders by grub-screws in tapped cross-holes.
To make them on the lathe that will use them, select stock of thickness 2 X the lathe’s centre-height above the tool clamping surface on the top slide. Cut blanks of length a bit over the top-slide width.
Hold the blanks on the top-slide by the normal tool-clamp, drill the bit holes and grub-screw holes from the headstock.
For angles to give height-adjustment or some lateral access needs such as boring recesses, working close to the chuck and left-hand tooling, set the blank in azimuth by an adjustable-square.
The ends are not critical. Simply file the sawn surfaces to neatness.
I used one only today, though on a Myford lathe, with a weeny bit of 1/4″ shank diameter, to bore out a hole too small for my normal tooling.
If you want some repeatability with this system, make a set of blanks a bit over-long. Counter-sink screw a thin steel strip along the flank that will face the headstock, and insert a simple pin protruding below the bar’s overhanging rear end. The strip extends deeper than the bar so acts as a location and orientation rebate over the top-slide’s end edge. The pin is the back-stop against the outer flank of the side. The strip and pin depths naturally need account for any height-adjusting shims, if you use those rather than the slope-adjustment method.