The races are probably notchy because they have been left stationary with a heavy preload.

The lathe will only be as good as the bearings so it is worth getting good quality ones. I wouldn't think £10 car wheel bearings are not going to give a good result. You can use lower spec bearings but you need decent test gear to find and balance out the high and low spots. You may get lucky but I have only seen cheap bearings used when the the nose register and internal taper have been cut in situ once the bearings have been fitted.

Spindle bearings have the high spots marked and come in matched pairs so minor errors cancel out.