Headset won't "seat"
 

I have a late-model mountain bike with cane creek headset. I can't get it to quite "seat" I.e. there's small gap right above the bearings. It doesn't seem loose at all but it's annoying (to look at).
So, question is opinion here: should I try to replace the seat that fits into slot above the bearing seat (I think you'll know what I mean, I'm sure I'm not using correct terminology so sorry). Or, just easier to replace whole headset ?

Can you post a photo?

Your description is very vague but is the gap between the top cover of the top bearing and the cup the upper bearing sits in?

Cane Creek headsets have a conical split ring that slides over the steerer and acts to center the top bearing. This ring must be installed small side down. If it's installed incorrectly, the top cover won't seat all the way.

Hillrider - thanks, .. the split ring that you describe seems to be the problem but it appears to be installed correctly, yet just doesn't want to "fit" down to where it is supposed to. Almost like something is blocking it - I was thinking the seat where it should sit is deformed and thus a replacement headset would fix that - wondering if there's anything else that would be causing the problem?

Any chance you installed one of the bearing cartridges upside down? That would also keep the headset from adjusting properly. If the split ring won't fit correctly that also points to the bearing not being installed in it's proper orientation.

The cartridge bearings should both be the same. If a 45 degree bearing is installed upside down, it would ruin the seat in the head tube quickly and probably create a huge gap.

Most headsets come with a few .25mm shims that are used to increase the space between the headset top cover section and the head tube, to prevent interference. Be sure that there are not any of those being used. If not, there'e little that can be done, other that recutting the top seat (assuming it's part of the head tube and not removable - some brands do have removable seats in the head tube).