The seal should be installed as shown (that side up). The fork spring directly contacts the emulator.
Mind you these settings are for 750F3 forks on a lighter CB550, but some information for you to start. I have the smaller diameter RT springs, so use 40 in/lb emulator springs & 3 turns because there wasn't the 4mm clearance they ask for between emulator valve plate OD and spring ID. I have .85kg fork springs, and limit travel to 115mm with a damper rod spacer under the top out spring with 1 rebound hole. I use 15W oil @ 175mm. Preload is 32mm and sag is +-28%.