This doesn't look right does it?

I’m putting back together a bike a bought to scavenge a fork from and the headset doesn’t look right to me, this is the past that came off it and it’s the only place I can put it. It seems to work OK when bolted together but I can’t remember if it was sticking over the frame like this when I got it. The other headsets i have on my bikes have a smaller top that fits inside. What am I missing?

That does look suspicious…the picture may be misleading but is that part galvanized? There really isn’t enough information in the picture to say what’s really going on. I’d say more pics, of all the parts or a trip to the LBS.

Here are all the parts. Plus the two parts pressed into the frame.

Well what I see in that pic starting top left moving clockwise is a fork race, bottom cup seal, compression ring (hard to tell, maybe a spacer), top bearing race, bearings, bearings.

Just to be clear the typical threadless headset should consist of the following:

top cap, bolt (star nut in fork steerer tube)
–stem–
spacers
compression ring (tapered ring)
top bearing race
seal (may or may not depending on headset)
bearing
top cup (in frame)
–headtube–
bottom cup (in frame)
bearing
seal ring
fork race (on fork)

This article has a headset that seems very similar aside from the top dust seal and the quickly antiquated circlip, jump to picture #6.