Join Date: Sep 2000
Location: Spokane WA
Bikes: Seven Axiom Ti, Trek 620, Masi cylocross (steel). Masi Souleville 8spd, Fat Chance Mtn. (steel), Schwinn Triple Bar cruiser, Mazi Speciale Fix/single, Schwinn Typhoon
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It is better to put the washers between the cone and locknut.
Do re-dish the wheel, you might want to spread, ( coldset), the rear triangel ( stays) and check the drop out alignment.
These small adjustments will NOT hurt a steel frame at all- common practices in many good shops