Dear Oh! Dear!!!
OK, the second O ring will be to stop the kickstarter shaft leaking on the OUTSIDE. both o rings are similar but the Kickstart is fatter and the thin one looks crushed and fits at the water jacket.
you have a lot to get right here. you need to line your ducks up in the right order!
first ratphuq is the valve timing: are you aware that there is one dot on one gear and two on the other and that they are timing marks?
second. you have a torque for the clutch nut and it is a LOT. it's like 90LB of torque on it.
next, your kickstart. OK, you made a mess of putting it together and so we have to put that right.
a) only fit the shaft with no extras AND THE SPRING.
you must hook the U part of the spring inside the gearbox area where there is a sharp lip. hook the 'U' in there.
b) put the kickstart arm on with it pointing up at the headstock. wynd the kickstart clockwise and when the shoulder of the kickstart stump has gone past the sledge plate stop shoulder you can now tap it down and in.
c) with the kickstart boss down, in and sprung loaded you can fit the baby spring and the sledge key, yes they will fit but don't do this with the bike on its side because if you lose any bits they will drop into the gearbox.
d) fit the kickstart gear and then the clutch (and time the cam timing). tighten the nut. and then I suggest you wobbe the kickstart boss. you WANT the kickstart sledge to fall off now if it is ever going to fall off! why wait till later?
e) if it falls off and you hear it 'ping', you need to completely undo everything back to looking at the boss: sprung and loaded.
f provisional) you need to undo the sledge plate and put 1mm washer behind it, then re-tighten and do the whole process again.
Taffy