OK, first issue is on number 3 setting, there is so much "slip" that with or without the ring, it isn't THAT much difference. Basically when you go to a number 3 setting, you are positioning the dipsey so a lot of the water just glides over it, instead of it "biting" into the water ... so you are basically reducing drag. You want the smaller dipseys (without rings) to be the ones that go out far to the side. The larger dipseys (with rings or mag size) are going to be your deeper and closer to the boat divers.
Second issue almost certainly has to do with how fast you are letting out your divers. You have to go SLOW!! If not you can actually get the reel spooling out to fast, and the line that clips onto the dipsey gets behind the it, and then when you stop spooling, it loops over the swivel arm, and you're done. Slow ... it should be under constant pressure ... never should you see the rod tip loose and free, should always have a bend in the rod, and tension on the line. Always, and especially when you are in waves ... that's even worse.