Pfister shower diverter valve leak

I took out the diverter valve out and found pieces of white plastic inside. It was clear that some plastic ring had broken. Removed the debris and took the valve to Home Depot. There I found a repair kit with rubber and plastic components.
The valve's stem has a coarse thread followed by a diameter reduction and a kind of conic shape with a flat end. An axial screw holds a rubber washer at the flat end.
I only put in the white teflon washer at the depression between the thread and the conic end of the stem. It stays kind of loose like an oversized ring on a finger.
When turned to the shower only position, the valve now only leaks about 10% of the water down the tub spout, instead of over 90% before the fix.

I imagine that as the stems retreats, the conic shape pushes the teflon washer against some surface that is not smooth enough. I would like to eliminate the leaking completely. Any suggestions?
Have a good day!

diverter

Yes, buy a complete new diverter. Sometimes even that will allow some water to not divert because the diverter has to exactly match the internal length of the valve in order to "double" seat for diverter action.

With this particular stem, it is important to just buy a complet new one and also buy the genuine P/P brand part, not the generic. I have this shower at home, and never have problems as long as I use good, new parts. (17 years)