I am installing a MVA # 133 tang sight on a Marlin 336A about 1952 vintage . Its the simplest lightest  tang sight, vernier no windage adjustment no elevation leade screw. Intended to mount through the guns tang screw hole rear, drilled and tapped 10/32 front of the base. Marlins have one buttstock  screw. It pulls the tangs together tightened, very strong screw substantial slotted head. Critical for sound buttstock  mount.  Screw furnished with the sight has a smaller head & not up to the job.

So I plan to attach with two 10/32 screws from MVA one front of the base one rear head sizes are correct for the sight base.  Not as strong as through tang but strong enough rifle only used on the Silhouette range.

Plan to set the action up the  mill well clamped,level & square, center punch the holes with quality punches small to larger using a magnifying visor. Not concerned with the set up or lay out.

Drill in the mill starting with a center drill then twist drill to size.   Tap same set up using a spring loaded follower punch indexed end of the tap wrench. Have done a lot of taping same methods but this one is critical, small & the tang probably hard. To date critical small tapping  jobs Scope-blocks etc have sent out to real gunsmith.

Here are the questions 

Tap set I have is a HS Steel Brubaker old but unused. Taper plug & bottom. Think the HS Steel tap  set us up to the job or should I buy carbide.

Plan to buy the correct drill, Machinery’s Handbook calls for drills from .156 to .166 depending on the class  1B 2B 3B. Have no idea what class this job is. What size should I be using. Probably get screw drill length for stiffness, again should I buy carbide or HS Steel. My though is HS Steel taps less likely to snap off in the hole although well set up generally prevents breaking  

Most times I lube with Tap Magic backing often and blowing chips with the air hose. Big jobs usually use same spindle oil as the lathe .

Any and  all advise appreciated  

Boats 

Why not just do it as Marlin did? Two 8-40 screws spaced 1.125" apart in standard Marlin spacing used on everything they ever tapped for a tang sight?
Are you using a MVA sight with a non Marlin spacing? And if you move it forward you need to watch out for breech bolt travel! MVA Marlin sights are designed with the staff pivot point moved rearward to avoid the bolt hitting the sight. So moving it forward defeats their design.

If you're setting it up in a mill, no need for center punching. Better off not, actually. Dial it out, split point stub drill as recommended already, very light pecks until you get a divot going.

If it feels hard drilling it, you might want to go up a couple sizes before tapping. .166 is no problem. It's steel, and possibly heat treated to whatever extent. You're not going to strip a thread in it. And depending on who you believe, that's the proper size for a 10-32 anyway, if you go off the formulas in Machinery's Handbook.

Boats, just remember to plug all the holes so she won't sink;-)

Plugging holes so they wouldn’t sink used to be my business !

Boats

Since Marlin never used the stock bolt or screw to mount tang sights, your setup is correct for a Marlin. Marlin always used 1.125" spacing from the early Ballards rifles up until they quit D&T the top tangs for sights.