Rick, I was in the exact situation as you, both 1&2.
After looking around on the net and asking a lot of questions, I purchased this one
http://www.harborfreight.com/cpi/ctaf/displayitem.taf?Itemnumber=44991. Keep checking HF for a 20% coupon. They have been offering them a lot lately.
This little mill can be enhanced a lot with some modifications. First, add an angle plate to the column to stiffen it. this really helps when tramming the mill. Then add a belt drive kit. You get much smoother operation and an increase in top speed. Next, add an air piston kit. This gives about 1 1/2" additional travel on the Z axis. The angle plate is a necessity. The others just make it better. All of this can be done for less than $200.
Make sure that the mini mill you purchase uses R8 collets. They are less expensive and more available than others.
As for the lathe, I got lucky. I found a used JET 9X20 for $400. It had more than $300 worth of accessories and tools with it. This in not one I would have purchased new, but I couldn't pass on this deal.
Here's some pics. The second one shows the angle plate.
If you get a mini mill, I will be glad to point you to the places I found to get the best bang for your buck on tooling and accessories.
