I am not familiar with the software you are using but most FEA programs have similar non-linear solver options.
The first option provides a DISPLACEMENT CONTROLLED solution, i.e. the solver stops when a pre-defined (by user, which is you) displacement is reached. This may be in UX, UY, UZ...
Usually when elements are highly distorted it is due to the mesh not being adequate. Try to refine the mesh globally or just locally where you expect the highest deformations to occur.