Hi Everyone, thanks for all your advice!

It seems like the best solution for me would be to put a different spindle with chuck on the machine and then have that move in to a static cutting tool fixed to the table. Like the second link Joanthan gave cutting the chess piece. However, I take the point about needing to hold the piece very still for a good finish on the cut. I think this alteration will be something to come back to later.

Now, as far as I can tell this CNC3040 has one main weak area and that is the (I don't know what you call it?) part that fixes the moving parts to the trapezoidal rod. It is made of plastic, looks like nylon and one actually got broken in the post with the weight of the spindle being thrown around on it. So, any advice of upgrading this part, if it is worth doing?

I originally thought of getting some metal ones but I wondered if it needs the contact area with the rod to be nylon for low friction? Anyway then I saw it is possible to get ball-screw rods and nuts which I get the impression are better, and I could replace the shafts with that. Why is a ball-screw system better, and anything else I should know?

The stepper motors on this machine seem quite slow (100 steps per mm, 1800 velocity), but they do seem pretty strong. The spindle (accidentally) hole-punched a 3mm end mill about 10mm directly in to a piece of melamine chip-board!