And you are damn-sure positive that the stem is bottomed out in the upper tree? You have measured the depth of the hole and the length of threads on the stem? I ask again because it is the most logical thing I can think of that could be spinning you out on this problem.

 

Logically, this sounds right. Maybe excess chrome in the bottom of the threaded hole or damaged threads in the bottom.

 

Ya I messured the threads and depth and you can see where the top of the stem slightly scored the bottom end of the hole in the tree when i screwed it in the first time. This is somewhat frastrating to me because i know I should not have to cut the stem....it seems like I am missing something maybe but I can not find any assembly diagrams for the type of trees I have....

 

After looking at all of your pictures with zoom...I see that you can put a spacer at the bottom due to your steering stop (it seems odd that there is not a dust cover on the bottom bearing). If it were me, I would put in a spacer above the top dust cover and see how it all lines up. All you have to worry about is how the spacer and the dust cover binding up on one another.

It would be worth a shot just putting in a spacer and seeing how it all lays out.

 

You have the internal fork stop installed 180 degrees off on the lower triple tree.