You want flush with inner shelf as
@flintknapper pictured.
This puts protruding lip level with outer diff rim. You can be out 1mm, which ten seat even better in dust shield.
View attachment 2682702
Than seals protruding lip, will fit snugly info FDS dust seal.
View attachment 2682710
You can save DS seal if you like. I often find I've set in a little to far, and leaver off inner diff tube and off metal plate on back of seal .
View attachment 2682698
View attachment 2682700
Most important take you time and get seated squarely. One side in more than the other, is when they leak.