Centring A Rotary Table
When using a rotary table on a mill, whether to mill an arc or drill holes in some circular pattern, there are two things that must be done to set up the workpiece. First, the workpiece must be centred on the rotary table. Second, the rotary table must be centred under the spindle. Then the mill table can be moved some appropriate distance and you can start cutting.
You could centre the table under the spindle first, by indicating off the hole in the centre of the table. Then you could mount the workpiece on the table and indicate off the workpiece. There are two problems with this approach. First, you are assuming that the hole in the table is true and centred. That may or may not be true. Second, this approach risks a sort of accumulation of errors, as you're measuring from two different features (the rotary table's hole and some feature on the workpiece). My suggestion is to centre the workpiece on the rotary table first, and then centre the rotary table under the spindle.
As shown in this photo, a DTI has been positioned with its tip against the inside of a hole in the workpiece. The DTI is held in the mill spindle, but that's just for convenience. (When I do this, I put a little wooden wedge between the spindle pulley and the headstock, to make sure the indicator remains stationary.) It could as easily be held on a test stand. Indeed, the measurement doesn't have to be done on the mill at all.
To centre the workpiece on the rotary table, spin the rotary table and watch for deflection of the indicator pointer. Adjust the chuck jaws as required, until the needle no longer deflects.
After the workpiece is centred on the rotary table, you now turn the spindle by hand, so the DTI tip sweeps the inside of the hole. Adjust the position of the mill table as required until no needle deflection is noted.
Again in this photo, a DTI is measuring from the inside of a hole. As in the previous illustration, the rotary table is spun and the workpiece's position on the rotary table is adjusted until the DTI shows no deflection.
After the workpiece is centred on the rotary table, you now turn the spindle so the DTI tip sweeps the inside of the hole. Adjust the position of the mill table as required until no needle deflection is noted.
You can, of course, use the pointed end of a centre finder to position over a point on the workpiece. When centring the table under the spindle, if you are indicating off a larger hole or other curved feature, you may need to mount the indicator on a short arm, so you can sweep a large enough radius.