I replaced that seal on my 350U this past spring, and my 300U is currently in the garage with the PTO cover off and the linkage disconnected, so I've sort of been there...
I haven't come across your particular problem (yet). On the 350, I remember thinking how nicely that shaft fit in the bushing -- no slop whatsoever, and it hasn't leaked a drop. So maybe part of the answer is that absolutely no slop is allowed there.
If your shaft is cocking enough to lose contact with the seal, that's a lot of misalignment for a short shaft. It doesn't seem like a big wear item (only a few degrees of movement, up to several times per day). That makes me suspect damage. (I've seen just about every part broken in 300U/350U PTO linkages. It's almost like operators get irritated when the bands need adjustment, and just horse on the lever instead.)
Is there any chance the bushing has a longitudinal crack? That would be hard to detect, but could allow that kind of cocking. Same thing for a small crack in the housing, which would allow the bushing to shift.
If you're using a new oil seal, does it allow as much shaft movement as the old one did? If you're using an old seal, has it become too stiff over time?
Just some thoughts. Good luck, and please let us know what you find out.
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