Is your filter the AC Type S-2 like in the picture?
I just cleaned mine up and am in the process of painting it. It had a NAPA 1503 filter element in it with the spring on top of the filter. When I was cleaning it up, and turned it upside down, a 1/2" close pipe nipple dropped out. It apparently was over the inner stem below the filter. I'm pretty sure that wasn't stock, and will be trying to figure out the correct way to re-assemble it like you. If the spring goes in the bottom, it probably just bears against the bottom of the filter. There are seals top and bottom of the filter element, so it probably doesn't need anything to seal it around the outer perimeter. Pushing the element up against the cover makes sense, as that would allow more room for big chunks to collect at the bottom. The outlet port is near the top of the center stem, then down through the connection at the bottom.
[on edit]I just searched thru the
Tech Tip here for the info, but didn't find anything. The tech tip author, ddautoparts hasn't been around since December of '08, and I didn't try his e-mail. He might know the correct info.