The displacement correction criterion can often be relaxed or sometimes even disabled, but it’s rarely a good idea to adjust the residual criterion. By default, it’s 0.5%, 25% seems way too much.
I’d rather adjust the contact stiffness. Preload should be fixed in the second step. Instead of tied contacts, it might be better to use tie constraints.
This runs to the end:
BoltedPartptA mod.pmx (1.8 MB)