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Funny, I just did it 2 days ago on a similar machine. Easy: be sensible and gentle. Unscrew the block from the pole, and rest is firmly on the floor head down, chuck up. Tighten the chuck fully, as for a 0.0 mm drill bit. Then pull hard on the main axis with 1 hand (hold the chuck). With the other one tap gently at the tip of the chuck with a hammer, 2x to the right, 2x to the left, repeat and insist, and always gently tapping perpendicularly to the axis. Reason: The axis and the chuck have a slightly conical shape.
Did you have to set the chuck into the spindle, or when you got the press, was the chuck already attached to the spindle? With the drill press I got (different brand), I had to set the chuck in the spindle and I put pressure on the chuck to set it in by placing a bit in the chuck and drilling in a piece of wood, which placed pressure on the chuck. If that's not the issue, check to see that the pulleys are turning ( flip the top open). Also check the tension of the pulleys (machine OFF) If there is nothing apparent or obviuosly not working, and if the press is new, yes, I would return it.
The 1/2 inch is the max size drill that will fit into the chuck. There are only a few different key sizes, and sears sells them in their tool area. Easiest thing to do is find the size of the hole the chuck fits into by using the back end of a drill bit that fits the best. Measure that drill bit or take it with you to the store. You might find two different size keys with that size pilot hole, or maybe only one. Good luck!
The chuck on 99% of the drill presses is just a press fit. The end of the spindle where the chuck goes on is slightly tapered to hold it on. Make sure the end of the spindle and inside surface of the chuck are very clean. With the motor off, raise the table high enough so you can still get the chuck on the spindle then turn the handle to lower the chuck against the table and press it firmly against the table to wedge the spindle in the chuck. There shouldn't be any need for anything more than this.
If it's locked up that tight the only thing you can do is turn the key as hard as you can until it either breaks free and works or just plain breaks. If it breaks free, spray a bunch of WD40 or like lubricant up into it, cycle the chuck to full open and full closed a few times to let it soak in then blow it out. If it's working freely throughout the travel and not sticking it should be OK. If it broke while trying to open, sticks while cycling it or just plain won't open, replace it. You need part number 1310049 from Delta to replace it (shop the internet for one). The chuck is just pressed on to the tapered spindle so you have to extend the spindle all the way down and hit the top of chuck, sometimes hard depending on how long it's been on there.
Nice tool ! If I were you, I'd bid it immediately. That orange ring seems to be only decorative / dust cover. The chuck is working by rotating the front side in one direction and the back side in the opposite direction.
There are only a few sizes of chuck key. Easiest thing to do is first find a drill bit that fits in the hole where the key goes to determine the size of the pin on the end of the key. (Use the back end of the drill bit.) Then take any other chuck key you have and see how closely it fits or doesn't fit - just as a reference. Take the reference chuck key and the drill bit with you to Sears or any place that sells a good assortment of tools. You will probably be able to determine the correct size key from what they have available very easily.