This setup tool construction was based on an article in "Model Engineer's Workshop" circa 1997.
The project was started with a 1/2" X 3/4" X 1 7/8" block of steel. The ends were milled to an overall length of 1 3/4". The sides were flycut to trim up and to reduce the 1/2" dimension to 0.455". This was centered in the 4-jaw chuck and center-drilled. It was drilled through with an 11/64" drill followed by a 3/16" drill bit. Next a 1" deep hole was drilled with a D drill (0.246") and reamed to 0.250". The part was reversed in the 4-jaw chuck and counterbored a hole with an F drill (0.257") to a depth of 5/16".
Since is did not have a thin enough and long enough end mill to mill the 0.110" slot 1/2" deep, a slitting saw was used instead. A 0.057" slitting saw was used. The saw was lowered 0.173" to cut the top half of the slot. After cutting the top half at 0.010" per pass, the saw was lowered 0.053" and the bottom half was cut similarly.
A piece of 3/8" brass round stock was center drilled in the lathe. After remounting in the 3-jaw chuck with a tailstock center 1 1/4" of the rod was turned down to 0.185" and 10-32 threads were cut for 1/2".
I had difficulty cutting near the tailstock as I did not at this time have a half-center. Consequently the bit near the tailstock end was cut while supporting the work with a steady rest.
The next 3/4" was reduced to 0.250". The part was cut off to length and the end chamfered with a file. The part was then mounted in the mill and a gap was milled with a 5/16" end mill to a depth of 0.068". The remaining end was milled to 0.123".
The next challenge was mounting a piece of 1/8" bar stock in order to reduce its thickness to 0.110" to fit in the slot. This problem was overcome by mounting the part on top of two cylindrical squares with holes drilled through both ends of the oversized workpiece. It was also difficult to get the workpiece level so the final product was 0.110 ± 0.004". The ends were cut off to length (2 1/4") and the part was milled to width (0.625"). The part was then mounted in a vise in order to mill the groove. The groove was cut to a depth of 0.055" in 11 passes with a 1/8" end mill. The slot was then enlarged to 0.140".
A 3/4" length of 5/8" steel was turned down to 0.460" for 3/8". It was then center drilled and drilled through with a #21 drill bit. The hole was tapped 10-32 to a depth of 1/2". The part was then counterbored with a G drill bit giving a 0.260" counterbore. This same end was then turned down to 0.390" for 0.10". The end was chamfered with a file and the part was cut off at 0.312". This small screw was put back in the 3-jaw chuck exposing the newly cut end. This end was also chamfered with a file. Finally, this screw (at a much later date) was knurled. Adding a 1/2" spring gave a very useful adjustable square.