I upgraded to a 22mm Weltmeister sway bar a few years ago. During some routine maintenance, I noticed it was hard to move. So, I removed it, cleaned and lubed the bushings and now moves freely. Ever since, I get a clunking sound when I hit a bump or hole in the road. I think it is adjusted correctly, there seems to be no load on it sitting flat.

There was a little side to side play and I limited it by adding some washers and felt material to snug up each side. Any ideas as to what is the cause?

Did you remove your gas tank when you were doing this work? Sometimes when you get the gas tank in deep, it rattles against it.

I took the tank out when I installed the new bar, there is plenty of clearance. That's the first thing that came to mind when I noticed the bar would not move freely, that the tank had settled on it. But that's not the case.

Probably you did this...
but when ever installing a bar its nearly impossible to get each side lined up perfectly... (plus these cars have a bit of variation even if you measure)

its critical to tweek things to get each side as much inline with the other during install as possible. Plus I ABSOLUTELY install zerks into bar bushings. I did so on my welts and also on my smart racing bars.

Once on the old race car (15 years back?) I ripped out a 6inch are of the inner fender where the sway bar bushing was. Thats when I learned that these bushings are a maintanence item and require frequent lube.
Once they bind, they tear

I'd remove it again... clean.. lube... and install zerks into the bushings.

Hollow 22mm weltmeister bars do flutter when not under stress (like a hard corner etc.)
Two things I did.
One, get 22mm pipe clamps so you can center the bar...it will slide side to side.
Second, cut a piece of garden hose and slice it all the way down the length. Put that over the bar. It stops the flutter and helps keep it centered also.

Rich