DJ,
you saved the day! i didn't realize that the gasket actual goes up into the block and creates a barrier on the inner wall. I thought it formed a barrier between the filter and the engine block surface like a standard oil filter.
I couldn't tell where the gasket should go when I pulled off the old filter as the gasket rolled halfway up the threaded shaft of the canister as I unscrewed it.
wow, it's one of those things that once you know, you know.
dang, I hope I'm not the only one who has done this....