That seems to be a common problem with the 16hp Vanguards. I picked up my 1641 about 10yrs ago because the guy thought the block was cracked. LOL Got it for cheap. I found out that seal in question was popped out. When reinstalling it I used Permatex ultra blue and it's been holding. I found the bore the seal sits in to b e on the loose side as well. 
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149,682,1641,1711 with a 12hp in it 1 8" brinly plow 1 10" brinly plow 451 snow blower,H-48 International snow thrower 42" york rake with fold down grader blade.
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