When removing the seal I grabbed the lip of the cover on accident and chipped it. Does the seal, seal against the side where its red or at the lip? Either way, do you think it will compromise the seal effect and I should get a new cover?

If you look at the pic (sorry that its not that great) you will see that only he small lip is damaged and not the side wall area.

 

From what I can barely see, you might be ok.

 

I think your fine too.

 

Coo thanks

 

I did something similar to the lower hub seal. Used a dremmel to radius the crack so it would not propagate further. I have been running the same front LT1 (97) cover for 6 years with no further failures or leaks.