Sorry for the confusion- I never have been able to explain things very well.
I used 3 pieces for the glue-up of the post. I cut the groove in one side of the center piece, the glued them together. Then I cut the piece to size making sure the groove was in the center of the blank. After turning on the lathe, I drilled the hole to the final (7/8" dia) size. The bit followed the groove so that after I was finished I had a nice straight hole.
If you were to use a stair baluster, or if you turn the peice first, you could then rip it in half and cut a groove in each piece, then glue it back together. That would work as well I would think.
Hope that helps.