I have never used an O ring on case screws like this, but its an interesting Idea I plan to file away and use perhaps. But while many of my bikes have left their mark here and there, typically screws are not the source of the leak.
I will submit that careful dressing of the gasket surfaces usually helps in spades... Rupert Ratio in his guide to BSA unit singles does a GREAT job detailing how to get a BSA oil tight. Worth a read. However in stamped tin covers there is very little to do other than work the surfaces as flat as possible, but on alloy castings its very common to get the threaded holes distorted a bit. I dont have a diagram or photo handy but to describe look at a flat alloy surface with the holes drilled and tapped. After much time and torque and on-off again applications the metal around the hole or stud can pull out slightly. (Pucker) so then you have a not so flat surface anymore.
The fix is to slightly deburr and chamfer the holes. a 10 thou chamfer should do the trick. THEN carefully RE-TAP the threaded hole with a sharp and good quality tap to clean up the threads all the way to the bottom. (Use a starter or cutting tap to begin and bottoming tap to complete) Blow out all the holes and check your bolts,studs or fasteners threads as well and if in doubt run a Die over the threads or in a pinch use a thread file.
To clean up a gasket surface a sheet of glass works well. (A car side flat window works well as its tempered) lay down the glass and tape some suitable wet/dry sandpaper to it. Use light machine oil and carefully slide the alloy cover or case around back and forth working slowly. and checking frequently. It will be obvious where the high and low spots are.... get the surfaces true and totally flat. If experienced and really bad condition start with 220grit, but work up to 400 grit should be good, but 600 for the anal types and totally OCD will have bragging rights at 800 grit as well as a near mirror finish.
I am a big fan of Hylomar as well, so, many theories on gaskets and sealing washers, o-rings and such, But thats another topic. But I would submit your leaks are traveling down the screw threads but the actual cause is actually distorted gasket surfaces. Water, Oils and lubricants have a funny habit at appearing in one location but the actual source is somewhere else.
