Not sure if you have or haven't done this yet since this is an older post(and I don't get on here as often as I should), however I just did the treadmill conversion to my Shopsmith in January.
It went very well, I was able to find a treadmill for free that had a 1.5hp DC motor in it. I stripped the entire treadmill of its components and basically all I did was shorten up the wiring and move the components to a different box. I left the flywheel on the motor and decided to use it for my pulley. I clamped the motor to my bench, hooked all the wiring up and turned it on and ran it slow while I took a bastard file and cut a groove into the pulley. It took a little while, maybe 30 min or so to get it where I wanted it. The control board had 4 POT adjustments on it, 2 were for speed(low and high end) the others I figured out were for torque and governor response to a load.
Overall I have to say that I love the results, especially considering the conversion cost me a whole $15. I have the speed range set from roughly 100rpm -3000rpm with good response to loads. I have another old Shopsmith that is waiting for its overhaul and I will be doing the same conversion to that one as well. I have only 1 complaint, and that is it has a built in time delay on start up. Turn it on and count to 5 then it starts nice and slow. Not really much of a pain just takes some getting used to.
The gray box with the dial is my control box.