I hope that I did not add to the confusion on this. The seal sits in the recess in the clutch housing, as I recall. The cup is tapped in from the outside of the frame rail.
If the frame rail is off, the seal can be pushed straight in. If you do not remove the rail, cutting the seal allows you to overlap the ends in order to squeeze the seal into the seat in the housing.
I think it is a good idea to really clean the seat with solvent to get it free of oil before applying the shellac. Let everything set up & then oil the seal a little to aid in seating the cup. It's been a couple years, so I am going by memory on this.