We all have our opinions, and here's my take on it.
"If" the side cover is straight, and "If" you are using a "new" gasket, and "If" the block and head are aligned, then a thin coating of Permatex #2 non-hardening applied to the "new" gasket to pan side will seal the side cover just peachie. A little note on Permatex: It's been used extensivly in the automotive industry, in all types of racing, on aircraft and as a gasket sealer in industreal applications since 1909. Properly used it is an excellent product to this day. I agree with the others, NO RUBBER SEALANT anywhere near the oil supply. The silicone rubber is meant to “form” a gasket not seal a cork or composite gasket. No need to seal the screws in my opinion, there is no reason they should leak unless the gasket is damaged or the casting is cracked.
Your oil level is part way up the Oil pan and is in no way anywhere near the altitude of the lifter gallery so no need to drain any oil out.
Last don't over tighten the screws, that just warps the side cover that you just spent an hour straightening.
It is normal for a cork gasket to "weep", mind you I say "weep" not leak. Cork is a natural cellulose material and therefore breaths, just ask a good wine connoisseur or vintner about how cork breaths. Best brand gaskets are a compressed composite gasket and not as prone to “weeping” as the cork is.
The comment about the head to block fit is because if the head was ever off for top end work, it's very possible that it was slightly miss-aligned when it was reinstalled. A little detail that a lot of mechanics neglect to check which will lead to a leak at that seam.
http://www.pbase.com/dennygraham/image/136174499 A little dab of sealer on the inside of the gasket at this point is a good idea.
http://www.pbase.com/dennygraham/image/136174692 Denny Graham
Sandwich, IL
