A dial indicator is a device used to measure runout or hop in round workpieces mounted between centers (lathe work) also used to line up a work piece perpendicular to a cutting or boring tool (grinding, boring, milling, drilling operations). In some isituations a dial indicator is used to measure things like end play on a C2,C3 axle shaft.
My advice to you would be to chek around at Pawn Shops stay away from the Chinese stuff. For the majority of the work you would use it for a 1" travel Indicator will do. Now look for a brand such as STARRETT, MITUTOYO, BROWN and SHARPE. Also SEARS stuff is good.
If you are looking at an indicator make sure the stem (rod that moves in and out) moves freely thruout it's full length of travel.001 Graduations will do but .0005 (1/2 thousandth) would be nice. Also look for an indicator that has a magnetic base with it preferably one made by the same company as the indicator.
Remember don't buy any thing that sticks, besure that the tips that screw on to the stem are there. Make sure you know it works when you leave or that you can bring it back. AND FINALLY DON"T DROP IT EVER.
P.S.Watch the needle as it moves when you test it with your finger-it should always return to the same place it started and always stop at the same place at the end of its travel (not the same place it started from).
ALSO-if you hold your finger against the end of the stem and depress it you should not be able to stop the needle from twitching around slightly when you attempt to hold one position this is a sign that you have a quality jeweled piece of equipment without a bend or binding stem.