If you can see the seal when the trunk lid is closed, two things come to mind. It's the wrong seal, or it's installed incorrectly. Do you have any pictures of the offending seal? Also the seal needs to have adhesive applied to the channel and seal upon installation.

Why change the OHC-6? That would just take another unique car off the road, and lessen it's value. But if your determined to make it a V-8 there are a few things to consider. First the frame mounts would need to be changed. If it's a manual trans, the bellhousing will need changed. Fuel and electrical lines will need changed or modified, along with a possible radiator upgrade.

There are great upgrades for the OHC-6, and John beat me to posting the link to Primatech. Think twice about it. I saved my base coupe from the dreaded V-8 swap. And I just talked with Jared (a lister), and he bought a '68 cammer to restore. So believe me, they are becoming more popular Also check this OHC site out: http://sohcsix.yuku.com/