I did have it really loose as you can see in the pic, but it doesn't seem to fit past the axel dropout -thickness of metal. (is that the piece of metal there beneath the two holes). I have two other bikes in the garage and both have holes that accomodate that half washer, this doesn't.
So fit that half washer in behind the axel dropout metal piece. I did see where the half cut washer fits on top of a nut on the axle, I figured that it sat on there somehow seeing that it didn't have a specific 'cut out' for it.