You're talking about a Blake clone, right?
That screw that holds the pivot arm should have a pair of brass washers on either side of it. I'd loosen it, remove, clean and re-install the washers.
The general idea is that you attach the stop bar (that keeps it from spinning), and select one of the probes that reaches the hole or cylinder you want to indicate.
Make sure the spindle is clear (!), and run it at about 500 - 700 RPM. Move the table feeds until you minimize the runout.
"To be old and wise, you must first have to be young and stupid."