Timing Cover Off & Now ?

Unknown

Well the radiator & hood are hanging from the rafters in the garage buy 2 sets of lineman blocks and the tming cover is off. I think I see why she was leaking oil so bad. The felt seal has about 1/8" air gap around before it seals. When I insert the new felt seal should I do anything to it like oil it or just install it dry ? The timing chain at the bottom longest area has about 5/8" slack in it. Is that to much and should I adjust it ? Thanks, Ron