Pictures?

I don't recall exactly but I think the "strange metal dust cover type thing" is only intended for use if replacing the default Felt stem and adding stem spacers. If its hitting the stem as installed it could be preventing the stem from sitting squarely on the bearings and from loading them correctly, which would explain the play and why tightening the pre-load isn't working. If it's been tightened and/or used like that, there may be damage.
I'd be a bit worried if I bought second hand and it was incorrectly assembled like that and had been ridden that way. The bearings can be replaced easily enough but the steerer and headtube could potentially have been under undue strain.

I concur with Ai_1. You will need a new bike.

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Have a look at the section under the heading "Fit", in this link for an explanation of the dust cover.
https://www.slowtwitch.com/..._Felt_IA16_6758.html

Edit: Fixed link

I was thinking the same thing about the "strange metal dust cover". I think it's flat on the bottom to cover the bearings and has the bumps on top to keep it aligned with the different stem. It's not needed for the original stem.

Thanks for the link.

So the bike came through with the dust cover thing fitted along with the stock stem and the bars wouldn't turn smoothly at all which seems to make sense with what the link says about fitting the dust cover. I removed it and fitted the stem flush to the headset/frame and still it was wobbling about terribly.

It's like I can't get the compression through the steerer bolt. On removal last time I noticed that the compression bung inside the fork steerer was pulling out as I tightened it.

It would have originally come with the stock stem and no dust cover fitted. It eould have been in a bag of spare bits. It sounds like perhaps the previous owner had swapped to a different stem, which would have needed the dust cover to be fitted, and maybe they also swapped out the bung, though I can't think why. Then they reassembled it incorrectly before selling it on?
With any luck all will be well once you get the pretension bung sorted out.

Is it the dust cover wobbling or the stem? And may I suggest a quick trip to your LBS?

I am not being facetious. I was in my LBS when someone brought in an IA(16?) with a similar problem. IIRC, the reason the stem was wobbling and couldn’t be tightened was because the owner had put the bike on a two prong car rack where the fork was slung over one prong and the other prong was inserted between the seat tube and top tube. Long story short, the forces on the fork were sufficient to create an indent int the steerer tube, causing it to wobble inside the head tube.

Bearing replacement didn’t help (because the problem was the steerer tube, not the bearing).

I may have recalled incorrectly, hence the suggestion that you visit your LBS (assuming that is permitted where you are located). I would certainly sort this out before riding it.

Big thanks for that.

Yeah Id resigned myself to a trip to the LBS - allowed as it is an essential business (though my visit may well not be!). A little glad that it is not simply my mechanical limitations but also concerned it could be something more. Thankfully the chap I bought it from seems to be very honest and apologetic and keen to help either in terms of refund or funding a fix.

That is good to hear. Did you buy it online or somewhere local?

On ebay... I know, risks etc.

The thing is that I wanted an IA disc but felt don't seem to have any supply for the UK for the best part of a year in my size so I saw this one and thought "next best option"

Really appreciate all your advice. Thanks.

eBay has a Money Back Guarantee, so there is no risk.