Well.... 1-9/16" is the most conservative opinion I've found.
Some suggest 1-19/32", some 1-5/8", but all caution that this may not be true for all castings not only by part number but by individual core position, rust in the water jacket, etc.
By back-cut I mean remove material from the stem side by the shallowest possible angle to just intersect the inner edge of the seat and the stem radius - it must not leave any cut, ring, mark, groove etc. at the radius or the head will snap off.
I have never used a sealer when assembling pump parts, partially because it's never been a problem, but also because I have bad feelings about the long-term effects of hot oil on silicone and teflon. If I think they're not air-tight (remember, no pressure, only vacuum) I solder them together to keep the heat down.
If you start it and have no or very low pressure, a leak is a possible reason since the pump would rather draw air from a leak than viscose cold oil. Easy test for a leak between the pick-up and the pipe: add 2 quarts of oil to submerge the joint. If it's better, it was leaking. Unfortunately, the pump body is high enough that I'm not sure this method will work.
