We the public are blessed to have you Brett Hurt. You're our teacher and great source of information. And I love watching your kitty cats watch as you work on the Exhibition Reproducer.
There should be no gap. The wax seals everything so both sides of the diaphragm must have a drop of wax. The needle bar just barely touches the diaphragm and the wax seals it from air leaks. Be sure to watch the videos a couple of times so you totally understand..
You put the white rubber gasket in and then you fit it. Each one will be a little bit different. It needs to be firm on the inside and the ends just touching.
I stopped at the 2 tiny nuts first attempt to rebuild. You only use tweezers to loosen and tighten? I am not stocked up on any bees wax though,,,,,,, Any thoughts on gorilla glue?