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When too much teflon tape or paste is used on a drain plug, it gets pushed up underneath the o-ring during installation. This causes the o-ring to get cut, leading to failure and leakage. The OP's photo shows exactly that. The o-ring is what provides the seal, so tape/paste isn't even needed. I don't care what anyone says, and I'm not going to debate it. If you use it, good for you, be happy.
many many years ago I decided to just do my own fluid changes because I got sick of the shoddy sloppy job of having it done...same deal, mess of thread sealer, O-Rings squished and hanging by a thread, fluid levels not correct .. I have never used thread sealer... I just clean the drain hole and quickly install the drain plug finger tight to have the O-Ring seat into the recessed portion properly then a quarter turn or so is all they have ever needed, never used a torque wrench (14-21 ft lbs is not much), and I like to wait for the case to cool a little while as it would be much easier to over tighten if still hot.. have never stripped one, cracked a case or had a leak on anything, vehicle, boat, lawnmower, whatever ... take your time, and DIY right
When too much teflon tape or paste is used on a drain plug, it gets pushed up underneath the o-ring during installation. This causes the o-ring to get cut, leading to failure and leakage. The OP's photo shows exactly that. The o-ring is what provides the seal, so tape/paste isn't even needed. I don't care what anyone says, and I'm not going to debate it. If you use it, good for you, be happy.
One more important note, never install an o-ring dry. A dab of oil on it will properly seat it.
I opened up the derby cover and the primary was at the appropriate level. Decided to change the oil too and same issue with the drain plug. Also same with the oil drain plug. I usually do my own oil changes but the last time I decided to have the dealer do the oil change and also go over it and do a good inspection. Lesson learned. Went for a short ride and no leaks but will keep an eye on it. Thanks to all for the direction and feedback.
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