I am an idiot about watch mechanics John, but that looks like the kind of Seiko bezel that works with a ring of metal that goes between the case and the bezel, and this ring has a bent portion that rises up to engage those 'slots' in the bottom of the bezel. The ring is what allows the bezel to turn only one direction, and makes the 'click-click-click" sound.
Does your watch have that ring? I believe the "other end' of this ring sticks into a hole in the case to locate it and prevent it from turning. Is yours properly installed? Is the bent part up too high or perhaps malformed?
I hope this helps! Perhaps a more qualified watch mechanic will kick in. You might also try the "Seikoholics" forum (you have to join to post) where Dr. Seiko can probably diagnose your watch's ills!
- Thomas
P.S. I don't think there is a rubber gasket on these, but then again I'm an idiot! ^L^