Tom:
I measured our offset washers to be right at 1-1/2" diameter. That 1-1/2 bit leaves no room for the build-up of finish material on your boards, and any finish except penetrating oil will have some build-up. We would suggest using the 1-5/8 bit instead. That leaves 1/16 all around the washer and should look OK. Much safer than risking damage to the finish by the washer.
We bought the 1-9/16 forstner bit at woodworker supply
http://woodworker.com/cgi-bin/FULLPRES.exe?PARTNUM=803-653. Good luck on your project
Mar-Ktech