Hamonrye,
The "handwheel" is the "nut" for the spindle. If it's too tight, you'll build heat fast and it won't turn well. Too loose and there's play... Remove chuck before adjusting...
Like I found out and Jet said, loosen both Allen screws, turn Handwheel CCW (left hand thread) and then tighten 1st Allen screw. Turn Handwheel by hand, it should easily rotate with no side play. If properly adjusted, tighten 2nd Allen screw.
Using the "handwheel" as a brake will eventually cause slipping and require adjusting and retightening Allen screws.
Hope this helps...