It appears that the Honda workshop manual is wrong about the correct required size of that seal: it has to be the same size as the shaft, which unfortunately is a bit undersized from 25 mm. Also, I now understand why the counter jockey told you to push it in a long way more than 2 mm below flush: the shaft is tapered, and the further you push it in, the closer the shaft is to the correct size.

The shiny mark, with the yellow oval, appears to be where the seal-lip has been running throughout the engine's life up to now:
[Linked Image]

Run your fingernail across that shiny mark and look at it closely, to ensure that it is a mark, not a groove. If it is a groove, you need to move the seal 2 mm sideways from that previous position.

Next, I suggest you oil the lip of a good seal then slide it down over the shaft until its lip is right over that shiny mark, and verify that the lip is in firm contact with the shaft, all the way around. Then check that the housing is clean where the outside of the seal will sit in it.

Now, do you know which way around to install the seal? The correct answer is, the same way around that Honda did when they built the engine. In case you don't remember which way that was, please read this carefully:
http://www.sealing.com/fileadmin/docs/Lip_Seal_Installation.pdf

If you are unclear about anything, please say so before you install the seal, since it is difficult to get them out without damage, once they are pressed in.