Well, the machine sucked. The idea behind it was alright, but the flexing in the rails was too much. It was simple to overlook, as we thought using a 20mm ball screw would keep it stiff, but we forgot to take into account the twisting the axis could do around the ball screw.
So anyway I ripped half of it apart and rebuilt it.

Under the ball screw you can see the timber mounted, with some stainless steel rods attached. For the bearing material I used HDPE (chopping board material). This is along side with the existing rails with linear ball bearings.
There is still a bit of movement in the axis which results in a .1mm variation in the middle, compared to the ends.
This is unacceptable so I have bit the bullet, and purchased precision THK linear guideways. Ebay is the best source for this kind of stuff as you get it from surplus retailers at a considerable saving.
I am also replacing the ball screws. They are both the rolled variety and their accuracy varies by .05mm over 300mm. They also suffer from backlash (slop in the ball nut that requires the screw to rotate x amount before the nut moves). This can be dealt with in software, but I'm going for precision.
Again, ebay is the source as ground ball screws with .07mm variation over 300mm with minimal backlash (under .01mm) are incredibly expensive brand new.
Another problem with using MDF is it absorbes moisture from the air and expands and contracts. The varnished stuff won't, but the rest will.
I'll be using extruded aluminium like this

Anyone have a source for that by any chance? Best I have found is $76 a meter for 40mm X 80mm.
My goal with the new machine is to have accuracy within .01mm so I will be going a bit smaller (200x200mm working area)
There is also .15mm of runout (how far from centre it spins) in the dremel shaft, so a home made spindle is on the cards also.
I'm confident all this can be done for under $1000. The first machine though is great as far as learning things. I have learnt a heap with regards to automation, accuracies, mounting methods, etc.
Also made my first circuit board with it on the weekend. Watching it drill all the holes was the best, no more squinting in front of a drill press, trying not to break a .8mm drill bit!
Here is what I am aiming for

This blokes website has inspired me not to settle for 2nd best and to just do it all properly.
http://www.5bears.com/cnc.htmStay tuned!