Apologies for the camera quality… it does its job though. Annotations will explain, since the sound on my camera is terribleeee. ;D
Ask me for clarifications if you want! PMs, this thread, all will work!
I like your setup. I have one thats a just a bit more detailed and longer, I googled “how to make yoyo string” and found a Tutorial on www.Instuctables.com(I think it’s http://www.instructables.com/id/How-To-Make-Yo-Yo-String/) Anyway I really like my setup and think I will try to get my parents Digital Camcorder Working and Make a String Tutorial so People can see mine and maybe get some ideas from mine. Like your your setup is similar to yours only I have a board the whole length and I have Rails made of cheap strips of balsa wood I got from a craft store that guide the block on the board and a strip for thr stop point, a nail at half-way point for bend, and two nails to hold Dremel (or drill, I use dremel) in place. I do the whole thing the same way as you only when it’s time to twist at the end I took a little screw hook and screwed it into a pen cap and put it on the end of the pen use that and spin it with my hand so it has the right tension so each strand don’t bind while twisting. Works better for me allthough I might try it with the yoyo, never tried it. I’ll try to get the vid posted in the next cpl days here. I have some new string and colors I want to try. Just got some Orange Poly, Multi Blues Rayon I think, GrannySmith Green Poly, and Canary Yellow Poly. I wanna try to mix with some cooton to make 50/50 and maybe the rayon with poly. See what I get. Instead of Using the Paper Clip you should pick up some screw hooks from Hardware or craft store they have different sizes they look like, um…http://tiny.cc/81fvt Might work a lil better for you and just cut the string and tie a knot in it, instead of taking the nail out.
I dunno about the hook. When I started, I never wanted to go and buy a hook, and just grabbed a paperclip instead. Works just as well, I think. As for cutting the string, I don’t know why I didn’t do that before… 
And if you want to try making some more unusual string… try this:
Go buy a spool of invisible thread, available at Jo-Ann. It’s a real thin, plasticy material. Then, on your first round, use the thread instead, but only go one way. (So just tie to block, and go to drill.) Then, cut it, and tie normal string to it… makes very good string for whips, and it’s long lasting. However, it holds tension as well as a sieve holds water 