Should I be worried? Subject:VF500

Looking at the picture below, I found this little guy out of it's hole.

What is this for? I proceeded to place the seal back in it's place, by pressing on the outside edges as much as I could, till it would stop, but not be able to see the top edge of the seal, I'm afraid it might be protruding at least .010".

Does this stop the water or oil from mixing?

Reading my Honda OEM manual, it doesn't identify this part. But it does say that if the water pump mechanical seal is leaking, you have to replace the pump as a whole unit. Bummer!!

I'm just going on what the PO said. Water leaked into the oil, he replaced the head gaskets, but put the head gasket on the front pair of cylinders on backwards. LOL!

I still have to warm it up fully (once the low speed jets are clean) to see if she'll leak. I've only gotten her to the point of hot, but not fully hot.

Any advice on this piece is appreciated, as I come to better understand the workings of this little gem.

Kindly

LL