The anti-sway liner is creeping up on my weight distribution hitch. Is that normal?

There is nothing to be concerned about. During the first several hundred miles of use the anti-sway material in the housing will 'creep' up as the ball seats itself into place and the ball will sink down into the housing. The amount of 'creep' will depend on the weight of your trailer and the type of roads you drive on. This is both normal and intended – and does not affect the use of your WD Hitch.