Carl,
Two very important points that seem to be glossed over or neglected in various forums and magazines. While building any engine or any object with multiple moving parts it's really critical that your parts are true to size within working limits, Items such as the piston bore to the crankshaft are built and fixtured at a true 90 degrees ect. I really can't stress how important that is for a free running engine so it doesn't bind up during operation. Proper alignment of your new lathe and mill is also just as, and maybe more important. You have no idea (yet) What a complicated yet rewarding hobby your about to start. That's not meant to intimidate you, Just to give you at least some idea of what or how some of your perceptions are going to change. One more point, Spend everthing you can afford on books about machining. You will return to these time after time for referance.
Since I got started typing this it occured to me that I should include two more items that will in the long run save you some inaccurate or poorly machined parts, Buy the very best quality of measuring equipment you can afford, And even more important buy top quality cutting tools. With either of the above two items you do get EXACTLY what you pay for. To start with, the cheaper cutting tools would be best as you will ruin a few while learning. After that, Buy one high quality end mill or even a very good quality piece of high speed steel for your lathe, resharpen that and you'll fully understand what I mean. Dirt cheap cutting tools generaly mean poor or low cutting tool life and cutting performance. All high speed steel or carbide is "NOT" the same between high and low prices.
Pete