Greetings and welcome aboard the CF, dailymirror.
From Pages 110 & 114
Mounting the flywheel housing
1) Replace the used oil seal with new one. Press fit the
oil seal in the flywheel housing, and coat the lip of the
oil seal with
engine oil.
2) Apply the liquid
gasket on the mounting surface of the flywheel housing and mount the flywheel housing to the cylinder block, while matching up with the knock pins.
NOTE:
Be careful that the liquid
gasket does not protrude onto the oil pan mounting surface.
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https://j109.org/docs/yanmar_3ym-2ym-service-manual.pdf