I found some pics of a distributor with an o-ring on the second groove (the one above the groove with a hole in it, but when I looked at Napa and auto zone, theirs didn't have one, so maybe I found some bad info. I'm not sure now what was causing the play. The drive gear seemed to be on there solid with no visible wear and the flat tip that engages the oil pump doesn't have any visible wear.

Is there supposed to be a gasket or something at the top?