Originally Posted by
Baboo
The washer should have a tab on it that fits in a groove on the steerer tube to prevent it from turning. This is supposed to make it easier to adjust by not transmitting rotational forces of jam nut to the cone. After reading your post again the rubber coming out from under the jam nut could mean that it is bottoming out before it actually tightens anything. If this is the case add another washer to raise it up.
First: Pictures would really help here. Can you post some?
To check whether the locknut is bottoming out, remove the stem and look down into the headset/steerer tube assembly. There should be 1-2 mm of space between the top of the steerer tube and the bottom of the lip on the locknut. as shown in the picture below. If you don't have this space, the locknut will jam against the top of the steerer tube instead of the top race, which will then not be fixed in place. Add a thin spacer.
You also need to figure out why your tabbed washer is turning. While you have the stem out, remove the lock nut to free the washer. Check to see whether there is a good fit of the tab in the slot. Also look to see if there is any thread damage on the steerer tube where the washer is positioned. An ill-fitting washer can rotate and carve a groove in the steerer tube threads inhibiting the proper function of the washer tab. See picture below for an example. If you do have a groove caused by the tabbed washer, a spacer can be used to move the tab to a position where it does function.
