should the rear main oil seal be pushed in all the way into the retainer??? or should there be some clearance between them??
it should be flush with the housing.
No you need to have clearance between the back of it .Refere to the manual if your overhauling ,it will specify the amount you need.I cant remember exactly off the top of my head what it is.!!If you have feeler gauges its a piece of cake but make sure you dont have it in crooked as you can damage the seal.