Step 1: What is ardudro?
Small TV: any kind, any size you want, must have an NTSC/PAL input, or the little yellow plug for video. This is what will display everything, so match the size to your mill. Most thrift stores will have an old portable TV at some time or another, I got mine for about $5.
Arduino: any flavor with an atmega328, 32u4, or more powerful. I used an UNO.
1k ohm resistor: any wattage
330-470 ohm resistor: also any wattage
two momentary switches/buttons: optional, but used for zeroing X and Y axes.
RCA jack: one of those yellow-red-white plugs for a TV, or a willingness to solder directly to the TVs rca jack.
rotary encoder: this is probably the only part you dont already have. These are avaliable at almost all electronics stores/sites except radioshack. A 32 cycle encoder is avaliable here: http://www.sciplus.com/p/QUESTEK-POSITIONSENSING-ENCODER_50792
this determines the accuracy of the readout. Divide one by the revolutions per inch on your mill axes times four times the number of encoder cycles per revolution. This is the distance of each "step", which is the increment (and therefore accuracy) of the readout. In my case, it was 1/(20*4*32)=1/2560=0.000390625. This will give me about 1/1000 accuracy, which should be more than accurate enough for anyone who would use this instead of a commercial DRO system.
Something to connect your encoders to the mill's axes: I used rubber stopper that I cut a slot in.