The o-ring is most likely damaged. Press cover in and note amount of movement for reassembly. At WHITE arrows in pic, use a thin blade screwdriver and pry out snap ring. Hopefully it was installed in the correct orientation for easy removal. Looks like the cover has been installed and removed many times already from marks on it. When snap ring is removed, use a larger blade screwdriver at RED arrow, removal grove in cover, and remove cover. Remove o-ring from bore if it does not come out with cover. Remove the inner servo assembly. Note position of parts. Inspect bore in case for burrs or damage, inspect cover for damage. Inspect all o-rings for damage and replace as needed. Install inner servo assembly into cover. Apply trans fluid to case bore and all o-rings and slide complete servo into case as removed. You will need to use some force to get servo to push in all the way. Install snap ring back into groove in case and make sure it is seated. The gap in the snap ring should be close to a slot in the case, see GREEN arrows. Press cover in, it should be the same amount of movement as before. Be creative. Extra hands can come in handy if available.
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