Originally Posted by
Andrew R Stewart
It looks to me as though the top cap (regardless of how it fits cosmeticly) is bottomed out on the steerer end/top of plug. If so then the function of drawing up the bearings will not fully happen, a loose headset bearing results. Adding one more thin spacer (maybe a couple/three mms thick) under the stem will raise the stem's top surface above that of the steerer/plug. Then the cap will seat fully on the stem and the bolt will draw up the steerer completely. Andy
Thanks for the advice. After researching it you are indeed correct. The stem should be a tiny bit higher to allow the top cap to sit correctly (like the image below).
The image is from this video, and he says that exact thing @ 2:53.
Looks like I need to add another small spacer. I'll update when I get it assembled properly.