The sleeve just needs to cover the groove (between A and B in your picture that was caused by the seal.) It should have come with a cup to drive it on. IIRC with the balancer sleeve, you just use the cup to drive it as far as it will go, then remove the cup and if you want to, break the flange off the end of the sleeve. Non-hardening sealant would be like Permatex No. 2 gasket sealer.
Link It just fills any voids that might be in the part under the sleeve so oil can't sneak between it and the sleeve.
