A great question indeed. It would surely appear that the omission of the oring in the diagram must have been a mistake. But, like Frank says, this engine is one that uses that crazy vacuum drain system that is supposed to draw any fuel/oil down from that area into the intake manifold. I have always questioned this design. With no oring, fuel/oil will most certainly sneak by that bearing when subject to pressure in the top crankcase. It is a real shame that the engineers didn’t incorporate both systems, use the standard oring design to seal off the crankcase, but add the vacuum drain idea to catch anything that might sneak by the oring or upper seal. Many guys (including myself years ago) just added the oring to the existing groove in the bearing, which is a big mistake. The oring blocks the vacuum port in the crankcase and often times creates an oily mess.
You mentioned that your engine had an oring around the upper bearing when you pulled the crankcase apart. Did it appear that the crankcase had been apart before? I looked in the 1957 book, sure looks like it does show an oring being used. I sure don’t want to create more confusion, so please confirm your model number and recheck the parts breakdown…It would be a real shame to get this thing reassembled only to have a oil leak under the flywheel….
OK, just reread your post….It would appear as though you have a 1956 model engine, but are using the 1957 literature? Do I have it right now? I would definitely find the correct parts list for your engine before reassembly. Again, you mentioned that the upper bearing had an oring when you pulled it apart…It would be a shame to reassemble this engine only to have an oil leak under the flywheel due to the omission of the oring.
