The first photo, where the steerer tube sticks up above the stem, will guarantee you can't adjust the headset properly. You MUST have the steerer BELOW the stem top or you must add a spacer ABOVE the stem to allow the top cap to clear the steerer tube.
Keep in mind what you are trying to do. You want to be able to pull the steerer tube upward to remove play. If the top cap is already sitting on the steerer tube, nothing can move.
Last edited by HillRider; 12-10-06 at 08:09 PM.