Is the round and squarish pop outs of your gasket pointing upwards towards the cover or pointing down towards the fluid? Pointing down towards the fluid will cause the gasket to take up fluid space and will mean that your fluid level will be about 3/8" below the rim. Mine is pointing up towards the lid and I was wondering if this was placed back wrong by previous owner? Carmyne

 

it collapses like an accordian, and should expand into the reservoir where the lost fluid used to be. fluid level 3/8" from the top is about right when full.

 

Yeah, it takes the place of vent in the cap.
- Chris