I never had an Alpha drive but I think I'd glue that in with weatherstrip adhesive (yellow snot as it's called) let it dry and put a light coating of marine grease on the inner edge, it appears that the bearing carrier pushes against the seal, correct? And the paper gasket seals the outer edges of the joint between the drive and transom mount?
On the Cobra and Volvo there is no seal there, the bearing carrier pushes against the inner lip of the bellows to make the seal, I always put grease on it and the bearing carrier and never had a leak there. Cobra uses a gasket like the Alpha, Volvo does not.