At the risk being thought complacent, my 25 year old Chinese Mill/Drill has 20 thou backlash in the X and Y traverses, and has had for as long as i can remember. You will never be free of backlash. As someone else said recently on another post, No backlash would mean No movement, ie effectively seizure.
The backlash will not desperately affect accuracy. If youn overshoot and have to back off, you back off by more than the backlash, say half a turn, and in returning to where you wanted to be, you take out the backlash again.
DRO will not eliminate backlash, but will tell you how far you have moved the table (which is what the dials also do.)
A DRO can read incorrectly, if there is any stiction. You set the depth of cut, as you think, and find as you machine, that the reading has crept up by a thou or two, because of the vibration! What do you believe, the analogue dial or the DRO? Then you measure with a Mic or a Depth Gauge.
Where ever possible, arrange the work so that you can measure the dimension, independant of the dials or DRO.
If you are a newbie, you are brave (Much braver than me ) to start stripping a machine to rebuild it!
Howard
Edited By Howard Lewis on 22/03/2019 17:56:53