Thanks for all the helpful advice everyone. Ken, Skip, Bill, Matt you are treasures. I've yet to fit the gear tuners having decided not to use friction pegs, but I shall try to locate the best spot for the saddle using my electronic tuner. But thanks to you guys I know where to start and what I'm trying to achieve and why.

The nice looking long friction pegs that came with the dulcimer, but have not been dressed, I shall use as noters.

If you know what the VSL is supposed to be (to the nearest 1/10" or .5mm) set the bridge there to start.  If you don't know what the VSL is supposed to be, then yes, set the bridge at 2x the nut to 7th fret (not 6+ fret) distance to start.   

Use your electronic tuner to test the accuracy of the notes on the melody string side as Skip suggests.  Leaving the melody string side exactly where it's supposed to be (make a tiny mark on the fretboard) then check the accuracy of the bass string side of things.

A floating bridge is one that can be moved across the top of the fretboard. The other bridge style fits into a slot. Since you're asking I would think you're MD is set up for a floating bridge. Use your tuner to adjust it to the proper location. Tune the open note, check it at the 7th fret, if sharp, move the bridge away from the nut and repeat

From what I have experienced the total distance could be 1/8 to 3/16 longer than what it computes  to be.  Set it where recommended , tune it then check the notes at the octave.  You may have to move the bridge one way or the other to get it right, then go back and  check the original open tuning to see if it is right.  You may have to angle the bridge slightly to get the true notes  at the octave.

At least wo things are going on here. 

In the science of acoustics on a perfectly balanced string in order to increase the tone of an instrument strung to be two octaves by one octave, you would fret the string in the precise middle.  On a dulcimer, that would be the seven fret.

Nice to know, but our strings are not perfect.  As you fret up the scale, strings tend to go slightly sharp.  As an example stewmac.com has a fret calculator for an acoustic guitar (the closest they have to a dulcimer.)  For this example, I entered an instrument with a 26" VSL.  Stewmac suggests increasing the Treble E string, generally a similar string to our "d" string by 0.091"  and the Bass E by 0.219".  Doing some calculation, that would leave the VSL for our Treble d string at 26.091 and our Bass D string at about 26.10".  Many makers will install the saddle at this slight angle.

For a dulcimer, stewmac suggests setting the break point on the saddle at 26.153" for a non compensated saddle.  Stewmac has typically cheaped out on dulcimers and I do not suggest using that number.

If all you are looking for is a quick way to set your bridge, add 0.01" to the melody side and 0.10 to the Bass side when placing your saddle (it is technically not a bridge as so many dulcimer makers insist) and stop reading this post.

If you want a perfectly exact answer, you need to divide those two numbers by the number of frets you would use if your instrument were chromatic and keep adding multiples of the resulting value to the treble and bass sides of your frets.  Instead of perfectly parallel frets, you would end up with frets that fanned out slightly on the bass side with the seven fret being 0.0455" further out on the treble side and 0.195 further out on the bass side.  The only people I have heard that actually do that are luthiers who sell $30,000 guitars. (And I am sure someone will let me know that they do it on dulcimers.) 

Day to day playing, intonation is in the ear of the musician.  Dusty's solution is the same as I use, a floating saddle that the musician can adjust so that the instrument sounds best in that musician's ear.

Sorry for the long post.  A good answer to your question is not easy and I look forward to reading the other responses.

Hi

I wonder if anyone can help with a query. I have been given a dulcimer that has not been completely finished. One of the tasks is to fit a bridge. The frets have been put in place and I understand the bridge is supposed to be located somewhere around twice the length of the nut to 7th fret. But is that an exact location ?

Blue Lion website says the twice rule will give the VSL ,but "The actual distance from the nut to the saddle is normally slightly longer for proper intonation." I've no idea what that means !  

Then I see Dusty has dulcimers with "floating bridges". So I'm a little confused, can anyone help me out.

Thanks