In that last image, is the displacement scale set to 1? What does your mesh look like? Keep in mind that Simulate is uses a penalty method for contact, so there will always be some level of penetration.
the scale is indeed 1. I've tried several levels of mesh refinement, but do not see any influence on the displacement results. I find the penetration large compared to relevant geometry dimensions
I was able to get similar results. I did see the y-seal push away from the rod and gland, as you would expect, but like you mentioned the amount of penetration still seemed large compared to the overall size. I did see a reduction in penetration from pass 1 to pass 2 when I checked the "allow mesh refinement" box. If you show the element edges on the FEA results you see that mesh refinement puts more elements in the contact zone on pass 2, as you'd expect. Maybe the answer is to just mesh the heck out of the contact region and look for improvement?
True, but you could use a link, simple spring, and a measure to get the reaction force if you really wanted it. It'd be much more efficient compared to a larger model.
How are the contact-pairs defined in your model? I don't have 3.0, so I can't check you files. You could also try adjusting the configuration parameter "sim_contact_penetration" and see if that helps.