Originally Posted by
same time
Sounds like you've got the headset parts assembled wrong somehow - a bearing retainer upside down is a good guess, or maybe a seal is in between two moving parts, or there's something missing. Find an exploded diagram of your headset and double-check everything. Make sure that, if the top and bottom bearings are different, you haven't mixed them up.
Also, check to make sure the top cap isn't bottoming out on the steerer tube when you tighten it.
+1
Either this. Or two other options.
1) Cups not fully pressed into frame
2) Frame not fully faced
If it's a frame new, most of the time it will need to be faced. If not you will get issues with the headset.