Here's the FSM installation step for the circular packing:
The open end is installed toward the cam if the cam tower/cap was removed and is now being installed. I think Fel-Pro wants the plug in the opposite direction because they're assuming you haven't removed the cam tower and will be driving it into opening. With the open end to the rear and the chamfered end toward the cam, it should be much like installing a freeze plug. I've always installed the plug after removing the cam towers, but I think the Fel-Pro directions will work too if you leave the cam tower in place.
Whichever approach your take, apply a little sealer to the inner third of the packing. Notice that it has a slightly smaller diameter than the other front and rear thirds. That and the coating on the plug should create a good seal. Fel-Pro's instruction to apply RTV around the outer edge of the plug is for extra measure.
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