"I’m using a small diameter split drill bushing and I can’t seem to get the drill parallel to the centerline of the spindle. Why?"
Check to make sure that you are not locking the second set screw on the bushing. The holes for small diameter drills do not extend the full length of the bushing. The back end of the bushing usually has a large internal chamfer or a counter bore under the second lock screw. When you tighten this screw, the bushing may distort, shifting the drill’s position. The solution is to use the front locking screw only. Or, you may find that you are using a bushing that is too short if the first set screw is locking on the back of the bushing, causing it to collapse instead of gripping the shank of the tool.