The 1-3/4" and 1-3/8" refer to two different door thicknesses. If the instructions are similar to those packaged with Kwik-Set locks, you use one of those bulls-eye drawings as a template for marking the center of the door for drilling. You actually hold the paper against the door and put an awl or center punch through the bulls-eye. Then, you use a good quality metal ruler to double check it. Then, you check it 8 more times before drilling, or plan on having a very bad day.
Do you have a wood boring bit or hole saw for this task?
Yes, depending on what the lockset catch mechanism diameter is. Measure it if can't tell by just looking and/or the instructions aren't clear as to which applies to the particular latch you have. You definitely don't want to have to try to ream it out if you drill it too small to begin with, and if it's too big--well, you can get a piece of dowel, put it in the hole and start over. (Of course, you can do the same thing if you do make the mistake, the other way too, but, obviously it's far better to do it right the first time). :)
If you don't know what you are using, practice on some scrap wood first. I would never use a paper template. I use a plastic one that's reusable.
Measure the thickness of the door, use the center hole which is labelled for your door thickness. If your door is 1 3/4 thick, use the center hole which is labelled 1 3/4.
Essentially, drill in the center of the door edge. Not closer to either side of the door.
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