No 3rd O-ring. Small on cross over pipe, into back of Water pump. Use watery dish soap to lube O-rings during install. Large O-ring is used later for water inlet to water bypass.
Timing marks:
IMHO It's best to use the "hard" timing marks. For cams, those are the straight lines (not "T"). For the crank, it's the nipple on oil cover. These are the hard marks use to set cams and cranks, when starting from unknown position. Like during engine rebuild or belt break or no marks on belt.
The FSM mention a hint: 1/2 tooth CW after marks. I don't do this either. I set marks dead on during disassembly, and I do not move cams. I install tensioner pulley (idler #1) with sealant on bolt threads (don't forget to seal threads). Sometimes I install tensioner pulley (idler #1) after belt. I then place belt on, before Idler pulley (idler #2). Since belt, at this point it's very loose (no tension on belt at all). I use 3 tiny clamp to hold belt on each sprocket, so it doesn't move. Then I install idler pulley #2 (AKA driver side pulley, AKA "L", AKA LH, AKA left, AKA BK 1 pulley). Then tensioner and pull pin. Now simple spin crank 720 degrees CW. Hard marks line up. Done with timing.
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We almost always end up moving crank. Using the hard mark (oil pump cover nipple). Makes setting TDC easy and sure.
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The plastic nipple on lower timing belt cover is used with the "T" cam marks. These are there, because factory calls this and interference engine. We've case after case, which they've not interfered, in 98-05 (non VVT). VVT is interfering, so we do use more care.
This is 03-05. T marks, which I never bother with. As they requires lower belt cover and pulley (harmonic balance). I've already time and test before I get this far. By using hard marks. This plastic mark may be off a tad. Due to shifting or shrinkage/expansion of lower plastic cover, weak tensioner and or belt wear.
Tip: Keep in mind "L" (left) is your left, as you sit in driver seat. Or same as saying, left side of vehicle.