Document Setup 2 x 3.5in
Bleed is arbitrary, but the standard is .125in
Export from ID, include bleeds from the pdf export dialog if you have designed with bleed.
If you have been doing it this way, the problem almost certainly lies with the vendor. What specifically is the problem?
Is this a front-to-back registration problem, or perhaps a sheet-to-sheet registation problem? Neither of those would be unusual on a copier. They simply are not designed wiothteh same tolerances as a press and you should design with that in mind. It's not unusual to see as much as 1/8" overall drift (1/16 either side of correct) in either direction on copiers and desktop printers.
The OP's question is ambiguous and unclear. Is Peter's definition what is happening? If that is the case, then i'd also agree with Peter's answer. Has the vendor offered any explanation, and if so, what was the explanation?
Daniel's setup is good... for north america. In Australia, a business card typically measures 55mm H x 90mm W. I say this after working in Australian print for +15 years and Canadian print for 6 months.
yeah: not sure if he means the allignment in imposition or in registration.