So, what to do? (investigating the mast step area.)

Research,... and also check out the mast step area itself for signs of damage or compression.

See below from Doug A who dealt with more advanced issues with his 35iii

"Dave / Joe,
The boat in question is a 1985 C&C 35-III which I purchased from the
original owner in the spring of 2013. While the mast step didn't look like
it had sagged, I thought I needed to improve the load distribution. So I
built a longer step for the original mast step to sit on. The mast step
enhancement was made with a 7" X 18 " aluminum structural channel with a
1/2" X 5 1/2" X 17" aluminum plate inside it. The original mast step sits on
top of the 1/2" plate. The channel dumps all the rain water to the bilge.
Raised the mast about 7/8" but not a big deal.

The keel bolts were torqued to spec with the exception of the forward bolt
under the mast. It just didn't want to tighten like the other bolts.

During the 2014 four race fall series, the wind averaged 17 to 22 knots, so
the boat was well heeled on each weather leg. After each race I was pumping
about two gallons of water from the forward cavity under the mast step using
a inspection hole I had made. When the boat was hauled, the smile had
reappeared and was seeping stinky water. I drilled a 1/4 hole into the keel
cavity on the leading edge of the fiberglass just above the lead and about 8
oz of foul water drained out. Additionally the forward keel bolt had lost
what torque it had. I was convinced at that point that the high density fill
C&C used below the mast was breaking down just as it had on my friends the
33 II. So after talking with other 35 III owners with similar issues, I
decided to excavate."
>> snip

Others report that in addition to being unable to torque the keelbolt to spec, they also cannot tighten their rigging as the mast step keeps compressing.  

Here are photos of the mast step area in the 33.  Workmanship not exactly inspiring, but OTOH, it seems to be perfectly intact.

See how the liner has been trimmed to allow the step to settle?  this was done at the factory.

Look closely.  to the lower right is a piece of marine plywood, roughly cut on one edge, which supported the starboard half the mast step, and under the mast step, a blob of putty which supported the port side of the mast step.  

Nice and clean.   the area around the bolts was slightly concave, but certainly not fractured or badly distorted.  A large aluminmum pad bedded on filled epoxy would distribute the bolt loads much better than the washers.