Hey Everyone,
Here is the final update and a fix for those that have the same issue:
Kreg sent me a replacement part for my mitre gauge and it behaved exactly the same as the previous part with way too much slop in the flip stop. I noticed that if I install the flip stop backwards (eg hanging off the back of the fence) it locks in place precisely with very little play (Unfortunately the way it was designed you cant just assemble it in a way that it will work)
However...
I discovered that the reason it works backwards but not in the correct orientation is that they designed the bracket with a foot that drops into the t-track to be shaped like a wedge while the front part of the bracket extends down and contacts the t-track before the wedge can engage...
The fix is easy, file a bit off the front of the bracket so it no longer contacts the fence.
Below is an image example of what I'm talking about:
Hopefully this helps someone...