I'm starting this thread as a place to gather information about different attempts to improve the Z axis accuracy and rigidity.

As I see it, there are at least two issues. The first being deflection in the arm which moves the quill up and down causing inaccuracies in the Z position. The second is the spindle moving in the X and Y plane causing less than perfect cuts while milling and out of round and tapered holes when drilling.

One thing that is likely particular to my machine is the belt driving the spindle. The belt supplied with my machine was pretty poor in construction. You could see visible lumps, differences in width and thickness, and a warped kink as it ran trying to move the pulleys up and down. When running, you could hear the belt slapping and vibrating. I replaced the factory belt with a Gates A36 from the local auto parts store and immediately saw the noise level drop and improved cut quality. So my first recommendation is to inspect yours.

Next in an attempt to improve I tried locking the quill in position when flycutting or milling. This also made an improvement but makes it necessary to stand by the machine when running to loosen the lock when the program is about to make a move with the Z axis. As a compromise, I tried spacing the lock screw bolt so the handle was at the 3:00 position and let gravity hold enough tension to stabilize the spindle yet not so much pressure as to cause too much drag on the Z movement that the link to the ballscrew flexes as it moves up and down. Still, this is not the total answer as the lock doesn't really support the spindle well enough as mentioned in one of Julian's posts. Julian has also discussed some things he thinks will improve the Z positioning. I'll let Julian describe what he has done in this regard.

So far, replacing the belt has made the biggest difference for me.

This is not bashing the machine. I'm just trying to get the best possible performance out of an already good machine. Hopefully, others will post their experiences and things they have tried (those that worked are as important as those that didn't) , things they have thought about trying and we can have a discussion that improves everyone's setup.