That little pipe goes in as far as physically possible. It's just not supposed to go in any further. The problem is something with the way it locks, I think. Playing with it, it was hard to tell which way would work better since it wasn't in water. The O ring looked fine. Those four little notches? and the other piece has two nubs by two of the notches? Try each one in a different spot. It shouldn't matter, but sometimes it does...
Have you checked to make sure it's level?