Fitting handle bars and sticking

Hi Guys, I am in the process of fitting the handle bars. Mounted them onto the stem tightened up the pinch bolt and turned left to right and it felt notchy on left turn, I took the handle bars off and look around the area and found the bottom of the steering lock housing was catching on the chrome ring. It has made a little groove in the housing.
The chrome ring is not the original as that got damaged during strip down, any help would be appreciated.
Thanks Andy
PS I forgot to mention it’s an early S3
The chrome ring is not the original as that got damaged during strip down, any help would be appreciated.

Thanks Andy
PS I forgot to mention it’s an early S3