I'm not going to look at your mesh.  You can try to reach out to Mauyra, who built models of bones of the spine. You can find several discussions I had with him.

You should create a Named Selection using the Worksheet to highlight the location of that Element.  You may need smaller element size but you don't have to reduce the global element size if you can apply local mesh control. I don't know what is possible in Materialise.  In Mechanical you can create a Sphere or Influence to make the element size smaller over a local radius about a coordinate system origin.

You should also plot the N-R Force Residual to see where it had the largest force imbalance.

Good luck,