Pictures pinched from ArcEuro!
First I’d stick with ER25, rather than ER32 or a different system, because you already have ER25 collets for your mill – save money!
ER25 collets cover a reasonable range, 1 to 16mm, probably my choice for a mini-lathe. If bigger is needed look to ER32 (2-20mm) or ER40 (3-26mm).
One way of mounting ER collets is a collet chuck connected to an MT taper that plugs into the spindle:
Main disadvantage is this type is threaded for a drawbar so long stock can’t be passed through the spindle. You can’t shove a rod through the headstock, grip it with a collet, work on it, part-off and repeat, which is handy for repetitive work. Without a drawbar there is some risk this type might come loose in the headstock. They can be plugged straight into the lathe and should be accurate without further adjustment. Not all lathe spindles will take a full-length MT male, in which case saw it off!
The alternative is a lathe collet chuck:
These attach to the baseplate and probably have to be zeroed. Mine is zeroed with a DTI by tapping it with a mallet, but once done collets can be swapped without affecting accuracy. No need for a drawbar and long stock can be passed through the spindle.
Which is best depends on the type of work you do. For me the advantages of the lathe collet chuck type out-weigh the quick change possibilities of the MT holder.
If serious about collets 5C is a good choice. The ER system only holds round stock, and the whole grip length of the collet should be used. 5C collets can be £bought to hold square stock, and I believe they don’t need as much grip length. A major disadvantage in my cheapskate workshop is that 5C is price, and because their grip diameters are small limited, a lot more expensive collets are needed compared with ER. I think ER is a better bet unless you already know why you need 5C!
Dave