By 1940 several modifications, options and improvements had been introduced leading to what might be termed the "Mk. 2". The tailstock-end leadscrew hanger bearing was now held on with one rather than two bolts, the bed feet were lengthened, the shape of the end of the bed was changed and, more significantly, a screwcutting gearbox was offered for the first time - see below.
The model illustrated above is fitted with the "Simplified" power cross feed apron that provided only surfacing feeds under power - the automatic sliding feed was still driven by the leadscrew thread acting on the apron clasp nuts.

The first lathe equipped with the new screwcutting gearbox was dispatched from the factory on May the 17th, 1940. The box could generate 48 threads from 4 to 224 per inch and, unlike those fitted to some other similar-sized lathes, had the three independent controls of the traditional Norton quick-change design - a 3-position selector lever on top (marked A, B and C) a 2-position sliding gear under the changewheel cover (to select fine and screwcutting feeds) and an 8-position tumble lever on the front.
Because it has a gearbox this lathe is fitted with the improved "Automatic" double-wall apron with a 3-position selector arm on the front. This mechanism also drove the power sliding feed (the movement up and down the bed) leaving the leadscrew for screwcutting only; it was fitted with a simple but robust cone clutch, operated by turning a star-shaped knob on the front. The clutch protected the apron from damaging overloads but meant that (like many similar designs) there was no means of instantly disengaging the power feeds - other than unscrewing the knob. The base of the apron, being enclosed, was used as an oil sump - the lubricant being splashed around the mechanism by the lower gears dipping into it.

The headstock was bolted to the bed at the front and clamped at the rear - in the  manner of the South Bend Heavy Ten - and fitted with a substantial backgear assembly with 5/8" wide gears positioned directly underneath the headstock spindle. A rather pleasing feature was the inner cover which safely guarded the large "bull wheel" on the spindle when the main cover was opened.

Simplified Power Feed Apron
The carriage (which initially had been fitted with hand cross feed only) was quickly offered with the option of a simple power cross feed apron; however, unlike the system offered on most other similar lathes, this did not provide a sliding feed to the carriage - that could only be obtained by engaging - and wearing out - the leadscrew clasp nuts. With the introduction of a screwcutting gearbox a second more sophisticated "Automatic" apron (with a distinguishing 3-position selector lever on the front) became available; this much taller and deeper double-wall apron also drove the power sliding feed (the movement up and down the bed) leaving the leadscrew for screwcutting only.

The bed was provided with two V ways, one to guide the saddle, and one to align the tailstock.
On both Mk. 1 and Mk. 2 models the beds were first rough milled and then (for an undisclosed period) stored for seasoning; a further session of machining followed - with the final fitting work and finish applied by hand with scrapers. On the Mk. 3 the hand scraping of the bed - and unfortunately the beautiful mottled finish this produced - was superseded by surface grinding, although the saddle continued to be hand scraped to fit the bed.

A significant detail improvement on the Mk. 2 Series 100 lathes concerned the mechanism for locking and unlocking the large spindle-mounted backgear bull wheel to the cone pulley. Previously, this had been the usual sort of spring-loaded pin, but was redesigned to produce a completely backlash-free connection, a most unusual state of affairs with a quick-release design. The system, designed by Paul Clausing, was based on a split ring, fastened to the bull wheel, and machined to be a close but clear fit within a drum turned into the largest diameter of the cone pulley; the ring was expanded to grip the cone pulley - and positively locked - by a cam connected to a knurled thumb wheel.