I don't think the problem is with the screw chuck. You should be able to put any #2 tapered tools in and have them seat even drills with tangs. This will be a problem down the road. (You will not want to modify all your adapters,collets, centers.) What diameter is the through hole? Seems to me it should be about 5/8". Is the lathe under warrantee? If not, I would drill (ream) the inboard end of the spindle enough to make it work. The taper would still be there, but the smallest end would be clear enough to make any male taper to fit. A machine shop should be able to do this pretty easily and economically (maybe cheaper than sending it back).