The cap is indeed just a 'cover' to keep dirt and crud out of the clicker adjuster.
The o-ring is part of what seals the assy.
Could be something else, too...like the fork is broken.
Turn the thing upside down and take a look. Or...wipe it off clean and see what happens. Maybe the base valve is just loose, maybe the fork has taken one too many hits and is itself cracked.
Note the copper (or brass) washer that is not shown in the drawing (it's part of the base valve assembly) that also helps seal the fork fluid INside the tube.
You are sure the oil off the bottom of the fork is not originating from the above seal..it's not just running down the outside of the fork?