The wave washer is merely there to take up freeplay and if the set-up is correct, the lateral force against the bearing (via the bearing shield) will be minimal. If you have excessive preload, the cranks will not spin properly and conversely, if you have less than proper preload, the cranks will move laterally. The wave washer can take up a fair bit of play (lateral movement) - around 2-3mm - if required.


I would simply put it together as per the diagram.


cheers