Keep the grinding kit well away form other machine tools.
As for lathes and mills. You have to decide what you want to make, and unfortunately, you have to decide that before you start, because its kind of non reversible. (Except at some cost)
There are opinions as to whether you want to go bigger or smaller – IMO, up to a point bigger is better, and for the one lathe man, a 3 1/2″ lathe is good choice because there is very big range of models made for such a size of machine. You can also make small stuff on it too, but it isn’t the best for small stuff, but you can get by with adapters.
Still decide what you can afford and the kind of thing you want to make, and then go for the machinery. And you have to be specific. You want to make 3″ – 4″ traction engines you need biggish (by our standards) machinery. You want to make 2″ ones or 5″ gauge locos, then a 3 1/2″ lathe is fine. You want to make clocks and the like, or smaller I/c engines, then you can well afford to go smaller.
It might be a good idea to visit some of the shows and look at models of a type you like to get a feel for the size of bits you need to swing. Very often you can talk to the makers of the models, and they will tell you what it was made on. Look at pix on this forum and ask the maker
My first buy list-
Lathe and vertical slide.
Grinder to sharpen tools.
Some kind of dividing gear (can make own)
Pillar drill.
Small linisher to do everything.
Then a mill.