My fork has not a key way (nothing I can see on the thread), but the washer is keyed. The gap is about 1-2mm between top of steerer and lip of the locknut when mounted.
So based on all great answers I dont need to use the washer. Sure I can buy a new headset but this is in great condition and it would be great if I could use it.

I know there is colnago headsets on ebay from this period, wonder what the stack height is on them?

For example
http://www.ebay.com/itm/Headset-Coln...item2a2c83ce2f