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The circled o-ring should not be there as it does nothing (someone has added it thinking it will seal). The o-rings that seal are the ones on the pipe fitting (in-between the pliers "needles" on your pic) and they go into the fitting on the cam cover.
Just had a look at my spare cam cover - the yellow compound that looks like an o-ring is actually squeezed-out excess resin that glues the fitting to the cam cover. You can leave it as it is, partially chipped off (as on my spare cover) or you can scrape off the remaining portions for neater appearance.