Hi Mark,
I have gone through a similar exercise to the one you are starting. After getting fed up with grinding my teeth every time I used my Seig SC4 lathe (or that piece of crap as it came to be called), I purchased a Boxford AUD lathe in pretty much the same state as your junkyard find with the intention of getting it going again.
My initial aim was to determine if it was feasible to get it up and running again without spending too much on it. It didn't have a motor and, although my long term plan was to fit it with a vfd 3 phase motor, initially I put an old washing machine motor in it so I could see if there was anything major wrong with the lathe which would make resurrecting it impossible. I then disassembled the lathe, gave everything a good clean, freed up the frozen bits, (including the Norton gearbox) and getting the chuck off, and put it back together. It was only after I was sure that the lathe would operate in an acceptable manner that I pulled it apart again and started painting it and spending a bit of money on the areas which were identified as needing attention during the initial trials. This meant I had a good idea of how much needed to be done before I started laying out any serious money. If you don't do this, you can end up half way through the restoration coming across an insurmountable problem, having to abandon the project, and wasting the money you had laid out to get to that stage.
As it turned out, I have ended up with a lathe I really like using and, as I'm sure you will find as well, a real sense of accomplishment for bringing something back to life.
The other suggestion I would make is to photograph everything as you go. There can be quite a long gap between pulling something apart and putting it back together and although I had a parts manual with exploded drawings, there were a number of occasions when the photos helped determine what went where.
Regards,
Alan