Ok so last night I sealed up my transmission as I put the clutch housing section back on to finish up the jdm final drive swap I did.

I let everything sit over night for the sealant to cure and I was just out there making sure all the bolts were torqued down properly and I noticed this seal hanging out on the output shaft.



I swear that seal (top finger is pointing to it) was inside the hole that my bottom finger is pointing to as I was cleaning things up, but it only fits on the narrower part of the shaft. There's no way the thicker part could fit inside it. I think I knocked it out of the hole while reassembling.

Was that seal supposed to be in that hole? That's the output shaft seal isn't it?

What have I done wrong here? Is that outer/lower part around the output shaft not supposed to be there?