yep, get a block test done to check for bad hg & do a compression check... at least you'll know if the motor is reasonably good
the o-ring is what seals the cps/dizzy in the head.. it will be old and plastic now so won't be doing a hell of a lot and will leak oil onto the exhaust manifold.. get an oem replacement and you'll be sweet
good luck with the car and post some pics
