The seal looks fine to me as far as depth is concerned. I've installed quite a few. The only one that leaked on me was a N.O.S. silicone one that I got in a box of parts. (I was too cheap to buy a new one, never since though) Since then, I've only used the current factory supplied teflon seal. Pre-formed with my fingers, installed dry where the seal contacts the flywheel, no pits or gouges on the flywheel etc. Back in my VW tech days, when I was in VW factory training school, our instructor told us to check every case with a strong heat gun or propane torch for cracks. I have only seen a crack once or twice on BMW engines, but on VW cases it was a regular occurrence to have a cracked case. I think Pommie John from down under has posted a pic of his race bike cracked case.