Hi update on what I have found, did.
Neil put some photos in my album, which I hope helps explain
Okay after taking the bully off, by removal of nut, this would not be the preload for the bearing as it only effected the bearing fort he running of the pully.
With this housing removed I could see the washer about 40mm down in the housing, hence I was asking if the quill had to be removed, which would cause an issue with the spring.
However this afternoon I mocked up a spanner to hold the spline shaft, managed to get the locking tab on the nut knocked down, then with a punch and a hammer mover the washer round to the next locking tab.
Well there is now no movement in the vertical spindle and it rotates freely, so may not have been very professional but appears to be successful.
When I am using the quill and spindle as a drill I still have some vertical movement, but looking into this it appears to be the quill and spindle which I think will be the backlash on the gearing, I assume this is normal.
So thanks for everyones input.
Thanks
Jim