You may sometimes find that components appear to penetrate through each other when playing a SolidWorks Motion study with Solid Body Contact already defined between the components. It is not uncommon to see parts penetrate each other like this in a Motion study.
In order to reduce the amount that the parts penetrate through each other, edit the settings of the applicable Contact feature inside the Motion study. Specifically, you want to increase the Stiffness and Maximum Damping values assigned to the Contact feature, which are shown in the Elastic Properties section at the bottom of the Contact PropertyManager. This could be accomplished in a couple of ways. You might be able to change the material type used for the parts inside the Contact feature. If you have assigned Acrylic, Nylon, or Rubber as the material type, changing the material to Aluminum or Steel will increase the Stiffness and Maximum Damping values. You can also manually enter a value for Stiffness and Maximum Damping if you uncheck the Material section of the Contact property manager. A typical value for Maximum Damping is 0.1%-1% of the Stiffness value.
Additionally, reducing the Penetration value in the Elastic Properties section of the Contact PropertyManager can help to reduce the amount of penetration in the Motion study. The damping coefficient increases from zero at the beginning of impact to its maximum value when it reaches the penetration depth that you enter for this value.
Aside from the settings in the Contact feature itself, there are some general settings in the Motion study that you can change to reduce the amount of penetration between parts. By default, SolidWorks Motion will use tessellated geometry to represent parts that contact each other. The surfaces of the contacting bodies are meshed with triangular elements. The density of the mesh is controlled with the 3D Contact Resolution slider in the Motion study properties. Increasing the resolution using this slider in the Motion study properties provides for a more accurate calculation of the contact between bodies.
If the tessellated geometry description is not sufficient, check the box in the Motion study properties that says "Use Precise Contact". This will use an exact description of the bodies' surfaces. This is the most accurate description of the bodies' surfaces, but it does require a longer time to solve.
You can also try to adjust the Accuracy slider in the Motion study properties to a higher level. But be aware that there is a trade-off between accuracy and solve time. Using a higher accuracy setting requires the integrator to correct the solution at each time step to within the desired accuracy level set on the slider.
In the Motion study Advanced Options, you can also change the Maximum Integrator Step Size to a smaller value. The Maximum Integrator Step Size controls the value of the largest time step the integrator may take during the solution. If this value is too big, there is a chance that the solver may take too large a step and miss the contact between the bodies, allowing them to penetrate each other.
Even after changing the settings suggested above, you may still see small amounts of penetration. This may be graphical in nature. If you can plot contact forces at the penetration location and the parts are not totally passing through each other, then the Contact feature is working properly and your results are valid.