The o-ring sits in the groove of the cap, just as it is in your photo. The washer is installed between the top of the spring and the metal tube.2. Does the o-ring go below the metal tube, or above it between the tube and the fork top?
3. The other fork top is really hard to get off. I've already shaved off some of the corners of the nut trying to get it off. Is there any way to get it off besides a monkey wrench?
If you use a good quality six point socket when tightening the cap, you shouldn't do any damage to the anodizing. If your socket is a little loose on the cap, try one wrap of masking tape on the cap hex. Torque the caps to 16 ft.lbs.
For doing front end work, I have two heavy duty eye bolts mounted securely to the 2x10's up in the ceiling, and use soft hooks on the handlebars & heavy duty tie-downs to get the front wheel off the floor.