I think diamonds are used in some lathes as cutting tools. So suprising thats not more common. I though diamonds strength and iirc its heat tolerance would be attractive to the folks who cut stuff.
So for the iron alloys, which are the material most frequently processed by machining, diamond is not suitable. Other hard crystals, like alumina a.k.a. corundum, are much better for this purpose, even if they are less hard than diamond.
c-BN is isoelectronic with diamond; h-BN is isoelectronic with graphite (but is an insulator).