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I have the same drill and I use it all the time with both annular cutters and twist drills.

1) move the motor up to the center of the rack

2) In the picture you can see five small set screws that that can be adjusted to keep the rack and motor tight and true with the base as it moves up and down. These screws all need to be as close to equally tightened as possible.

3) If you raise the drill/cutter off the material, let go of the handles and the drill motor falls or slides under it's own weight down to the material - THOSE SCREWS ARE NOT TIGHT ENOUGH and the hole cutters will wander as shown in your pictures. You should have resistance moving the drill up as well as down.

Most other mag drills have an additional bearing mounted to the base that helps keep the motor/cutter from wandering. These drills don't have the extra support so the rack the motor sits in has to be very snug to the point where you are pushing the cutter down hard to the material
 
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