Originally Posted by DannoXYZ

Yes, it's a little too loose if you have any play at any location at all. What will happen with that looseness is the load will be concentrated on a single ball or two at that point and the wear will accelerate. Better too tight with extra friction than too loose (because it'll wear into correct specs eventually).

Due to the gap in the threads, when you tighten the lockring, it will actually pull the cup outwards slightly, thus opening up some clearance. So... with the cup adjusted just perfect so there's no play, tighten it up an additional 1/16-1/8th of a turn, then tighten the lockring, which will pull the cup back out to the previous setting of perfectly smooth. Depending upon how square the facing is and how clean the threads, this additional amount will vary.