That's the right O-ring.
They are typically rock-hard and flat, leaking quite a bit.
The holes: you only need to add 4 new holes. Also chamfer the holes that are already there (on the inside of the hub). The new holes should go into the deep part of the spline so a clutch plate's tooth does not rest against a weakened rib at the site.
On the Pre-K4 bikes, the existing holes were a bit smaller and rough inside, so they plugged easily with crud over time. Although the K4-later holes were smoother in the bores, the ones at the back wall of the hub often were too high, well above the oil level in the spinning hub. If yours are like either of these, smooth the holes with a fast drill bit, and cut down the "wall" that prevents oil from entering the ones at the back wall of the hub. I also cut little oil-capturing grooves in front of each hole (from having roadrace tracks starve the plates from too much RPM), but you'd have to look in my book to see a picture of that trick.
