You also need to check the space between the top of the steering tube and the plug. Sometimes the tube is cut too long, which makes it contact the plug, preventing proper compression.
Keep tightening the plug gradually. Place the bike on the ground, pull the front brake, and place your thumb and index finger in front and back of the frame where the headset contacts. Then, push/pull the bike to feel for any play. Tighten the plug just enough so you don't feel any play, but not too much more than that.