The bevel side goes in, the bevel creates a small space for the quad seal, if you install the spacer with the flat side in, the quad seal would be squashed flat.I have a jims tranny...6 speed...the spacer is beveled on the ID of the spacer, just like above. If I was to put the beveled side in towards the tranny and the square, flat, side towards the final drive sprocket nothing would be pushing on the seal that just fits over the shaft.
Should the beveled side be facing out towards the sprocket?
When I pull the spacer out , fluid pours out..is this normal?
When you pull the spacer out, fluid pours out, yes this is normal because the spacer is also a seal.