If you're using one washer and its not binding then you have an alignment issue, disassemble it and look at the respective heights. Theres 2 ways to remedy this, If one lug is taller it'll have to be shorten equal to the other or as you have noticed, use a washer to build up the other. Then mount the fender as I mentioned earlier. But try it without using the fender, you'll be able to see whether or not there's an alignment issue. The lock nut goes inboard.