oh no, is this 8.75 housing too bad?

Is this true, that the seal doesn't go into the tube? If that's the case, and it turns out to centered, then I might be ok. If not, then I would have to run green bearings instead. The axles turn just fine when it's all together. By hand, I can detect no binding or issues turning it. I talked to the seller and he is willing to press on green bearings for me to fix the axle, if that's what is needed, or whatever. We just need to figure out the real issue. I'm taking it to a shop this weekend to have it checked on a jig.