How to Apply Magic Lube II to pump basket o-ring?
- remove the o-ring and clean it with a clean rag.
- Use the same rag to clean the channel. Not spotless, just to insure there is no grime or dirt that can cause issues.
- Use liberal amount of pool lube, use the index finger and thumb to get a good coverage of lube on the o-ring.
- Install o-ring and pump basket. Clean lube off hands.
The TINIEST speck of a piece of grass, leaf, etc. can cause an air leak. While you are at it, clean off the bottom lip of the plastic pump basket lid where it comes in contact with the o ring.
Note: Never pull the O-ring through your fingers. Always push it through your fingers. Pulling stretches the O-ring and it ends up being too big. 
What are the Different Types of Pump Seals?
It's definitely worthwhile to use the "ozone/salt" seal. The regular seals will wear out and leak. The silicon carbide seals are the best, but usually too expensive to be worthwhile in most cases.
Basic seals have Buna Elastomers, a Phenolic (Plastic) Primary Ring and a Ceramic Seat. Theses are junk due to the primary ring composition.
"Ozone/salt" seals have Viton Elastomers, a Carbon Primary Ring and a Polished Ceramic Seat. These are acceptable.
Best Quality Seals
The best seals have Viton Elastomers, a Silicon Carbide Primary Ring and a Silicon Carbide Seat.