Figured it out. The drain assembly never came with the rubber washer that mounts between the plastic washer and the chrome nut that is between the bottom of the sink and the the drain.
I'm just finishing a complete remodel of the bathroom and I'm just hooking up the drain to the sink.
I believe I've installed it correctly but I'm still getting a very small leak (after 30sec of running both facets, a small bulb or drop of water slowly appears where the bottom of the sink...