That spring is supposed to hold the filter element down against the bottom of the canister, and I believe there's supposed to be a flat washer under it to distribute the spring pressure over the top of the element. Pressurized oil from the port on the side of the filter housing is forced through the paper element to the outlet orfice about halfway up the center post. Without the spring and sealing washers on the top and bottom, the oil just bypasses the filter media. Yes, the big end of the spring is supposed to bear down on the top of the element.
Jerry
