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Leave them in Auto, as long as the vacuum system is working properly.
Which o-ring are you refering to. The one in the front just behind the dial, or the vacuum seal in the rear?.
I guess you would have to remove the hub (just remove the retaining ring and pull really hard) and dissasemble it. Although I'm not sure if it is rebuildable to begin with. You'll have to call your dealers parts dept to see if they sell any internal parts for them.
On my truck, the o-ring that seals the dial to the body of the hub tore and squished out the last time I turned the dial. I went to the parts dept and described what happened and told them that I needed the o-ring to seal the dial to the body. They sold me an "o-ring kit, 4C3Z-1K106-AA". The kit contains two black o-rings that are identical to each other and a steel clip. The description on the bag reads "retaining clip for hub lock retention to wheel hub, o-ring for testing hub lock, o-ring for final installation of hub lock into wheel hub" ($10.88). They also sold me the yellow o-ring, part number "F81Z-4A322-AA", description "seal" ($4.22). This is the o-ring that I assume would work with the clip from the other kit to attach the hub lock assembly to the wheel hub.
Since they sell the parts, I assume that the hub lock can be disassembled to replace that dial o-ring, though I have yet to see an exploded view of the assembly to see exactly what is involved in taking the hub lock apart to replace the dial o-ring.
Perhaps there is an exploded view in one of the service manuals or one of these DVD manuals? I sure would like to either fix this or find out definitively that it can't be fixed and take the parts back. Does anyone have access to such a diagram?