A-body Idler Arm Question?
Hmm...if you have that kind of play without any washers, I would say install it inside with the idler arm. I guess top or bottom doesn't matter too much, but it will change the height of the arm, so I would say top, to keep the idler arm lower on the K-member.
Miy new one is set up liek this (all inside the k member):
washer - felt seal - arm - felt seal - washer
There is no washer on the nut side of the k-memeber (but there wasn't one on the old arm either). Without either washer I had a bunch of play.