[Rick Parker]

Towards the inside. Leave about 3/8" of the circular seal "standing up/out" of the main cap on one side and the same with the portion of the seal in the block on the other side. Then put a dap of silicone or "The Right Stuff" (orange/black areosol can made by Permatex, much better than silicone) on the ends of the seal and assemble. The idea behind this is to prevent the parting line of the seal from being exactly on the parting line of the cap thus helping eliminate a potential spot for leakage (the ends of the seal butting together). Take your time, clean all surfaces with carb cleaner or lacquer thinner. Put a slight amount (with your finger)of the sealer on the mating surface of the block/cap to eliminate another source of leaks.

Good luck



Rick