That gasket would be on the fuel feed side of the carburetor. It's not unusual for the rubber gaskets, diaphragms and o-rings to absorb some fuel and swell a bit, then they look funny when the carb is first disassembled but once dry and the fuel has evaporated, return to their original shape.
If the fuel was leaking from the bore, where the throttle butterfly is, this tells you the metering needle was not sealing in the seat, or fuel was leaking from around the outside of the seat, past that pencil diameter round o-ring.
But remember, when pressurizing to test pop and/or a metering needle leak problem, you must block off the fuel return line. You can simply pressurize the fuel pump inlet line while the return line is blocked off and should be able to build at least 20psi of pressure before one of the needles pops off the seat.
If not, and the fuel return line was blocked off as it should, there's definitely a leak somewhere, quite possibly the needle isn't sealing into the seat, if the fuel gushes from inside the bore.
If the leak is external to the bore, for instance coming from the side cover, the metering needle isn't the cause. In this case, there's some kind of problem with the cover gasket.
BTW, I'm not sure which type of carbs you have, I'm guessing you have two mounted and the fuel pump is on the PTO carburetor.
This gasket you mentioned, doesn't need to be installed on the carb that doesn't have a fuel pump, just the pretzel o-ring is sufficient.
But if you're like me, I prefer to put all the gaskets, o-rings and seals back in the same configuration as the factory did, assuming someone before me hasn't goofed it up already then I have to figure out if they made a mistake and correct it.
If the offending carb in this case is the one that doesn't have the fuel pump, you don't need that gasket, just the pretzel o-ring is sufficient.
The carb shown in this drawing does have the fuel pump, and that gasket is item #5 The other carb, without the fuel pump just has the cover and pretzel o-ring.
Again, don't forget when testing the metering needle/seat you must block off the fuel return line.
Good luck, let us know if you get it.