Originally Posted by
a wise man
It sounds like your fork steerer is too long. Which is usually dealt with by adding a washer under the locknut so it doesn't bottom out. The bike probably had a taller headset at one time.
Could be wrong, though. Just basing that on what you explained.
This ^^^^ is it. And no.................you are not wrong. I've installed dozens/tons/lots/whole buncha 1" threaded headsets where the top cap stops at the top of the fork steerer.