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You are probably right about drilling without a drill press Kevin. I think I could do it with the block in a vise and drill horizontally. I was lucky enough to have access to a drill press so I did...

I don't think your spade bit is going to be suitable. It will splinter or crack the wood. You need to invest in a small set of Forstner bits. A 7/8" should be the right bit to use. If it is too small...