Ian,
The lathe already came with DRO's for the saddle and cross slide, and I had a spare display head from when I upgraded my mill from 2 axis to 3 axis, so I only had to buy two read scales.
This is my lathe
http://www.chesteruk.net/store/crusader_lathe.htmBut I had the vendor modify it some to allow me to get a lot more movement on the saddle, and a larger swing.
The DRO's came from here
http://www.machine-dro.co.uk/index.php?target=categories&category_id=24But these only show the display heads, you have to factor in the cost of the read scales as well. They go from £100 each upwards, depending on the length required. So around £400 for a two axis one.
Unless you go for the Newall system, about double these prices, these are about the best you can get. You can buy cheaper setups on ebay, but they aren't up to it on quality and features, and by the time you add in import duty, just pay the little extra and go for a better system.
I had to do a fairly major setup on the tailstock, because the ram always rotates slightly, so I had to design and build a carriage system with a built in slip joint to take that out of the equation. I can now drill with the same accuracy as the other slides. I had to do that mod, as some of the work I am doing is critical on hole depth.
This is how I fitted the compound slide read head.
How I got over the rotation of the ram
And the finished tailstock setup.
You can set up using much cheaper equipment, but you can guarantee that you will have continuous trouble. I went down that route with my old mill, and almost every day I had to fiddle with something to get it running correctly. The main problems were swarf and liquid penetration, plus continually having to change batteries.
I still used one on my new mill, but that is only for drilling depth, and I had a friend make me up a transformer so that it ran from the mains, and I just put a capacitor across the battery terminals. It doesn't suffer as the old ones did, it is away from the cutter and suds.
This pic shows the cheaper type of scales and the associated display head. You can get ones that have three displays in one, so with three scales, and the head you could most probably make up a cheap 3 axis system for under £200.
I hope this has answered your questions.
John