A friend of mine just bought this machine the other day [url]http://www.grizzly.com/products/item.cfm?itemnumber=G0517[/url]. For the money, it is a real nice little machine -- It would be a good starter mill/drill, can handle any drilling task you will have and most light milling.
It uses the MT3 spindle and has a round column, but all in all a good deal for the money... if you find you really enjoy this type of work, you can always move up to a better mill and retire this to drilling only?
As for a good small lathe choice... the field is sort of weak -- There are lots of mixed results on the asian 9X20s, some say they are fine... others say they are crap?
edited to add: This may be more than you want to spend right now, but I had a chance to use the dedicated lathe and mill from Smithy [url]www.smithy.com[/url] -- their numbers BZ-239 and BX-288, they seemed very nice... I can think of better choices for a mill in that price range, but Smithy has financing?
Also, I remember hearing that the little machines sold on [url]www.lathemaster.com[/url] are supposed to be pretty good for the price?
edited again to add: I am not at all a fan of "3-in-1" machines, but I saw this at a trade show a few months ago [url]http://www.grizzly.com/products/item.cfm?itemnumber=G0516[/url] and must say that for the price it was a nice looking machine... I really like the way they did the mill head, you can actually get the head down to the work. Can not say how it runs or how tight it is, but for the money it certainly seems like a good little machine... not at all big, if room is a concern.
The 3-in-1 machines are a copromise, think of them as a lathe that can "sort of" do milling. Shoptask makes a nice bridge mill multi machine, but it is pretty big and not at all cheap.
HIH