Another update (sorry). But after some more tinkering I found the issue.
My thru axle, like many others, is thinner in the middle. 15mm at either end and 13mm in the middle. When in the fork, there is only about 1cm of axle that is 15mm before it goes down to 13mm. So when the bike is on the floor and the thru axle rests on the main body of the hub, the main part of the hub with the bearings is actually about 1mm higher then the end caps. This is causing them to rub on the retaining covers.
I removed the axle and wrapped some tape in the middle to make more the 13mm part 15mm. Problem now solved, but still ordered another thru axle that has much less of a thinner part in the middle.