@shanr: The “Array Modifier” is very tricky. So don’t worry, your’re not alone with that problem.
Please check, whether …
1) … your offset object for the “Array Modifier” is in the center of the wheel
2) … the offset object and your duplicated object have their origins in the same place (the distance between these two origins is take as offset from one duplicate to the next)
3) … your tread object is rotated or scaled: undo them with ALT + R and ALT + S since these transformations are repeated for every duplicate !
I can see that …
1) … you have checked “Relative Offset” . Uncheck it. “Object Offset” is the only offset you need.
2) … you have choosen the left side reference image (REF_left): Since it is not in the wheel’s center (and it shouldn’t be there!), place an empty (because it doesn’t contain any occluding mesh) instead in the wheel’s center and choose this empty as “Object Offset” in your “Array Modifier”
The rotation of the empty around the global x-axis (which is in our specific case also the wheel’s rotation axis) determines how many degrees are between two neighbouring duplicates. And again: your tread’s object origin must be in the same place as the object origin of your offset object (in our case the above mentioned empty)
