The ML4 is a relatively small lathe, so you would have been better to have gone for 8mm tools. NOW he tells me!
is there any chance that you could return the tools in exchange for 8mm?
If not, you need to remove 2 mm from the shank of each tool, by some reasonably accurate means.
In normal times someone in your local M E club would probably have been able to do this for you, but now it is more difficult, but probably not impossible.
Whereaboiuts are you? It may be that someone on here would be prepared to have a go at the job for you.
With response to your query about the handle for traversing the Saddle, yes you need a locknut. Having adjusted the end float to the minimum, consistent with ease of movement, the locknut then locks the handle to shaft in that position. Needless to say it will be BSF or BSW, so you may end up making your own!
If you read the Myford ML1 – 4 pages on Lathes UK, you will learn a great deal about the machine, and it's quirks.
If you can find the Serial Number, Jon Cameron may be able to give some idea of the year of manufacture. (PM him )
I have helped recommission a ML4, but not one with damage such as yours. (Your previous owner looks to have engaged backgear as a means of unscrewing a stuck chuck. You now now know why this not advisable.
That machine did not have Tumbler Reverse, and although it had a complete set of Changewheels, no studs on which to mount them!
The owner was not interested in cutting screw threads, but I cut an extra 20T gear and modified a 60T from a ML7 so that a fine feed could be set up, using the studs that I made. This allowed a fine feed of about 0.004"/rev to obtained.
I would suggest making a Centre Height Gauge, to help you set tools to centre height, to ensure that they cut properly and well.
Since the threads used on the Mandrel changed over the years, it might be worth making up an adaptor from whatever your machine has, to the "standard" 1.25 x 12 tpi. This will allow you to mount the post 1947 Myford thread chucks or their backplates.
I am not an expert on ML4s, (There are others more experienced than I, on here ) by any stretch of the imagination, but if I can help in any way, PM me.
Howard