Thanks for the responses guys! I am glad I did not settle for the sounds that I was getting after the Bilstein install. I tore them apart yesterday and put them back together properly. Thankfully I was able to do the job myself and did not have to pay a shop to do it wrong. I cant imagine your frustration! I am guessing the wrong placement of the washer happens frequently with DIY as well as at the shop considering the factory washer is on the top plate.
For anyone stumbling across this thread before or after your Bilstein install.The process goes... Circlip at wanted ride height, Install Bilstein supplied Spring Seat Adapter, Install Factory Spring Seat, Install Bump Stop, Install compressed spring, Install Bilstein Supplied washer on piston rod, Install Separator Cap on Spring, Install Top Plate, Install Locknut. http://cart.bilsteinus.com/pdfs/E4-WM5-Y352A00.pdf