Hi, I had the same problem working out the depth of the seal, as long as it just clears the flywheel by a few thou when it's tightened down snug you will be ok, I have done this on two 661s now without any comebacks!
I have come across hardening problems with the early ms261's crankshaft too on the clutch bearing race, correct me if I'm wrong but, I was of the understanding that these were case hardening failures, I can't understand how else they could fail like this?
Nine times out of ten it's the piston ring that's worn, affecting compression.
(Rebuilt lots of these with this fault, they all felt like compression was ok!)
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