Transfer case adapter seal question

[BrianG]

Was getting ready to put the transmission and transfer case back under the truck and noticed that the transfer case was leaking in several places. Set out to correct those issues and found that the transfer case is full of transmission fluid. Took the adapter off and noticed two things. First the o-ring on the transfer case Input shaft is bad. Second issue is that the only seal that I see in the adapter that would keep transmission oil out of the transfer case is facing so that the back or open side faces the transfer case. Is that the way it supposed to be? Seems backwards to me but thought someone on here might know for sure.
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