Solidworks Simulation: No penetration Contact set clarification

Problem - There is a Bolt, a washer plate and a slotted plate. The slotted plate is fixed from the sides, has a symmetry condition on the bottom & the force is being applied axially to the shank of the bolt. I have no penetration contact set pretty much every touching and non-touching surfaces overriding the global contact set of bonded. The only non-touching surfaces in this problem is the bolt shank and through hole in the washer plate & the bolt shank and the sides of the slot in the slotted plate. I am using a Direct Sparse solver.

When I run the analysis the bolt still penetrates through the the surfaces its not supposed to. The true representation doesn't really do that but regardless the results dont make make sense as why is the bolt being biased only to one side.

The only way I can get it to work is if I go to the particular contact set and check the box for gap clearance and turn on always ignore clearance.

What exactly is the gap clearance option and when am I supposed to use it? The bigger question would be why does the shank of the bolt penetrate the surface of the washer & slotted plate even thought its not supposed to?

SolidworksSimulation