Tazengr,
1) Your question regarding the arc length: This appears to be a chart of all the deflections around the circumference of the washer. Ideally, this graph would be a straight horizontal line (same deflection at all points), but it's a numerical estimate.
2) The first thing to check are your units and the material stiffness. We've had trouble with imported material props in WF2 at work. It's worth checking, at least.
3) Seymours2571 is correct about this being a contact/friction problem. However, a simple substitute you can try is to delete the displacement constraint and replace it with a 60 lbf load. Sometimes, when you constrain a surface, you can inadvertently add rotational stiffness on a surface that needs to be free to rotate.
You might get some fake stresses in the area, but if all you want is displacement, this is a good first step (using contact will give more realistic stresses). You probably want to add a very weak (e.g., 0.1 lbf/in in x,y,& z) spring to ground to prevent numberical "flyaway".
4) This problem lends itself nicely to using radial symmetry. Effectively, you are doing a 2D problem on the cross-section. It takes care of some of the global constraint issues.
5) If possible, can you post the dimensions of your washer (ID, OD, thickness, & height)? I'd like to try modelling this myself, and it sounds like seymours would also.
Good luck,