I said in my post above that the chalk method dosn't work. If I can, I am going to edit that part. The chalk method works pretty darn well once you understand the lag or delay in the chalk mark from the heaviest part of the flywheel. I think I discounted it's value inappropriately as I actually learned quite a bit with the chalk, but forgot that point when I moved on to the dial indicator. Appologies to Mr X.
I did find that once you get the balance pretty close, you are leaving a chalk mark nearly all the way around the wheel and since the energy imparted to the whole assembly is less, the inertial forces that cause the chalk lag are less or at least different so the ammount of chalkmark lag is different. I found it a little more difficult at that point to determine the exact spot to add weight so was back to trial and error anyway.
The dial indicator worked well for me at that point as the ammount of frame movement fore-aft is directly proportional to the ammount of movement imparted by the imbalance. If you are down to trial and error anyway, I found it much easier to spin it up and look at the needle movement on the dial indicator and add weight, then to mark chalk, measure chalk, add weight, clean chalk off, and spin back up for the next chalk mark.
How much is good enough? If you are going to bolt it down, chalk is probably the easiest way to take the edge off the movement and will also get you started adding weight in the appropriate location around that 76+ inches of flywheel. But since all the hard setup is done to allow the assembly to easilly move to mark with chalk, it is real easy to use a inexpensive dial indicator to refine it even further. I used a $7.95 Dial Indicator from Harbor Freight, clamped to a piece of steel setting on the floor. My generator is still setting in the same location on the garage floor minus the pipe rollers. It has over 15 hours under load on it now over the last several months just setting there. You can detect a little movement from the torque pulses under load, but it is not enough to overcome the friction and move the 1000# across the garage floor.
Ron