STS,
I've got to be misinterpreting something in your post. Are you saying the rep told you they remove the basket gasket and don't use it? I believe the Hayward AG pumps usually have a circular basket lid thus the comment about an O-ring. Others are square or rectangular. I can't believe there would be an adequate seal without a soft gasket of some sort. I can't believe Hayward can economically mold parts to an accuracy that would negate use of a sealing gasket/O-ring. Take a close look at your lid and see if something is there. If it's just a plastic to plastic (or some hard material) seal then I just don't understand.
Al