Should this be like this?

[Swesson]

I noticed my thread dial indicator wasn't meshing with the leadscrew so I slackened off the bolt and tilted it in so that it would. Should it be like this, just seems odd but it turns now when it goes up and down the screw.

 

[Jasonb]

Its usual to leave it out of mesh when not in use and just put it into mesh when you need it for screw cutting.

J

 

[Tin Falcon]

LOL or rather polite chuckle ! yep normal behavior . Like Jason said leave it disengaged when not threading (most of the time)
engage it to use it. While engaged and the half nut not engaged it will spin engage the half nut it will stop turning again and follow the lead screw.
Tin

 

[chucketn]

I don't even have mine on the lathe! Turn such a variety of threads, I'm in the habit of lreaving the leadscrew engaged and reversing the lathe to go back to start.