Seek perfection... Any wobble is not good and the worse it wobbles the more trouble it will cause you. I don't go as far as using a dial indicator but if I can discern ANY wobble I keep working until I can't. The sprocket should spin as true and wiggle free as you can get it. Lateral wobble could be the result of a warped sprocket, not unusual, and you might need to resort to a hammer and a block of wood to get it flat. Verticle movement, or non-concentricity is caused by the sprocket not being exactly centered on the rear hub. I have never encountered this but some folks have found sprockets with the center hole drilled off center which obviously could cause real headaches trying to get it to run true. Keep working. It takes a lot of patients to get that sprocket to run perfectly true but you'll be rewarded with a smoother running chain/bike if you get it right. Start by snugging all nine bolts then in a star pattern, alternating from side to side, tighten them and keep testing by spinning the wheel. When all bolts are good and snug spin the wheel and mark the wobble with a felt tip pen. Tighten or loosen the bolts as required to get the sprocket to run true. If it appears that it is warped, remove it and lay on a flat surface such as sheet of glass and check it for flatness. If its warped, get the warp out by using a soft head hammer, a block of wood or a large Crescent wrench to bend it flat. Hope this gets you in the ball park. Let us know how you make out.
Tom