Carbide tools are designed to generate heat to soften the material locally. They are not sharp (Except the ground variety. Which most of us do not use )
The ML7 was designed many years ago, and launched in 1947. It is somewhat flexible machine, so not the perfect for carbide inserts, although folk who know what they are about do splendid work with such combinations.
A correctly ground HSS tool has a razor sharp cutting edge and should not rub in the way that a carbide tends to do.
I have just compared a shear tool to a freshly sharpened HSS bit in a tangential tool holder, and am pleased ,with the results of a 0.002" cut with a 0.0023"/rev feed. There is not much difference betweenn the two, whether dry or musing neat cutting oil. Not a ground finish, but pretty good, although I would not run a highly loaded white metal bearing on either.
So sharpen a HSS bit, (as large as possible, for rigidity ) and try the dumbell again.. Do ensure that tghe cutting edge is on the centreline, or it will not cut properly.
It is possible that your problems stem from the lack of clamping and rigidity in the Tool Holder / TopSlide interface, so that is one variable to remove before you start looking for greater precision..
Howard