After an hour of beating myself up and resorting to posting on the forum, I may have figured it out. there was a plastic collar that fit beneath the silver collar in this photo. It seemed to act as a spacer thus letting the silver collar create tension on the inner plastic collar which makes contact with the inner neck bearing. I am baffled that such a cheap plastic collar has such an important function.... but... i tightened everything pretty good and the bike steers as a bike should.

If i am wrong, please correct me. Otherwise, hopefully this post will serve as some help for somebody else trying to figure this bike out.

Next step... figuring out the lighting/electrical....