First, you may have a steerer tube that is a little too long. Add a a washer to the stack and see if that resolves your issue.
If not, then it might be the issueyou suggested, that the tongued washer is binding on the threads. To make sure that this is not the case, take off the top nut, thread the headset cup down tight, then place the tongued washer tight against it. Tap it lightly into place with a large punch or an adjustable wrench that is a slip fit over the fork threads. Then put on the top nut, threading it down to the point where the final adjustment of the headset is made by backing off the headset cup.
Garth wrote: The headset adjusts with a catch. As tight as I make the top nut, the actual headset cup at the top can still be backed off. In other words the top locknut does not seem to be tightening against the cup nut. I think the problem could be that the groove washer is binding. Anyone ever have an issue like this?
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