I just replaced mine and I seated them all the way down with an 1 1/4" socket. There was a noticeable gap between the seal and the circlip. I have no doubt that over time the seal will work it's way up to rest against the circlip. It seems like there should be some sort of spacer in there to take up the gap, but I reckon it doesn't really matter if it floats up or down over time... as long as it doesn't get past the circlip and it holds the oil in the fork.