Thanks, Bob, for the reply. I do hope that that red Comp's break-in lube was moly based. That makes me feel better :-).
I installed the seal staggered with the Permatex dark-red sealant which I used also on the head bolts' threads. The lip was facing forward per the instructions sheet.
Do you think excessive oil pressure blew it out? As it turned out, the auto store gave me the oil pump with the purple spring. I wanted high-volume pump (Melling HV), but I guess I got the high-pressure? I installed stock black spring there.