You're the man to decide what's "good enough", but as a guide, a 5deg error in alignment will give just under 0.5% error in measurement. 10deg error is about 1.5% error. Personally, I just set the thing by eye, and as long as you can align it against a known horizontal line on the machine somewhere, I doubt if you'd be far out. I'm not quite sure what you mean when you talk about setting the DTI in relation to the shaft, though - can you provide a little sketch or something?