That is indeed a milling attachment for a lathe. The "V" groove is used for holding round parts such as a shaft that needs a key way cut in it. Destroyers and smaller class ships in the US Navy Ships were issued these for the Lathe in the machine shop as there was no room for a mill. Typically the Lathe would be a 12" X 48". In addition to the lathe there would be a pedestal grinder with 12" wheels, an 18" metal cutting vertical bandsaw, and a Radial Drill Press.
Welding and cutting was done in the HT (Hull Technician) shop usually located in the next space. Below is a picture of a Lathe and Radial Drill Press in the cramped quarters of a Fletcher Class Destroyer in the machine shop. While in-port a watertight bulkhead plate is removed and a trolly beam bolted in place connecting the machine shop to the HT shop.