I need to launch AIM to open this file, not Workbench.
The inactive contacts are normal.
In the Project Schematic, I see two Static Structural models, B and C. Which one should I look at?
I used AIM 19.2 to look at C. In your contact status snapshot above, you can see that the hole in the Eye bolt interferes with the shaft diameter by 0.026 mm. This is causing the odd behavior. Use this as a negative offset to the hole. Click on the Frictional contact and Flip Contact/Target then change the details as shown below.
Under Analysis Settings,
Change Auto Time Stepping to Yes.
Change the Initial Substeps to 100.
Change Large Deflection to Yes.
Now the stress on the two parts looks more like what you would expect.