Congratulations, your problem kept my mind going all night. Here are some more thoughts:

  • In regards to the sharp interface, what are you using the for the Interface Compression Level? The value of 2 should probably be used here to keep the sharp gradient.
  • One possible cause of the fingers is walls placed at the outlet. Are you seeing any messages about this? This would be consistent with increased fingers with the increased element count.
  • What are you using as an initial condition? The best solution would be to have a converged single phase steady state solution for Fluid 1 before starting the transient multiphase run. Any uncertainty in the initial condition could manifest in these fingers. You would specify the initial condition in the solver step.
  • Perhaps the first thing to do is look at two different timesteps. Do the fingers grow in size, or once they are there they convect as a stable front? ┬áThis knowledge would help us identify other potential sources.