Merc 3.0 Thermo sleeve supposed to be flush?

[va-searay180]

2000 Merc 3.0 Engine. Replacing thermo housing, thermostat, thermo gasket (gasket under thermo), and plastic sleeve with new Merc parts. (The boat didn't have a thermo in it when I boat it). When I install the thermo gasket, then thermo, then gently tap plastic sleeve in, the sleeve sits proud about 1/16" above the surface of the new thermo housing. Is that normal? I have the Merc #26 manual and it doesn't show that level of detail. I don't want to install the thermo cover and torque the bolts if it's not right. It 'looks' like it would work fine, but not what I was expecting when I put it together on the bench. Thanks,

 

[va-searay180]

Here's what I'm referring to

 

[Grub54891]

Is the gasket under the thermostat an o-ring? If so it should compress when snugged up.