The felt washer isn't actually a seal - it's just a muck guard to keep the dirt out of the lip seal.
I presume you have a small (or large) leak, and if so you will need to renew the seal assembly. The metal sleeve needs to be carefully bashed off (using a bit of magic, lift the staked parts ;-)) and then carefully remove the assembly by clamping a ring round the end and tapping it off - then when that doesn't work, destroy it whilst cusing ad scowling.
The new seal / sleeve assy is about £6, and can be carfully tapped into place but protect the end from hammer blows using a piece of wood and a couple of pieces of carpet or underlay.
If it is leaking - the other thing you need to check is that the mating part of the propshaft is not grooved (worn by the seal) and not scratched, gouged or rusty, as then the new seal will soon leak too.
Thirdly, check the plain bush in the end of the box by seeing how much cross axial play there is in the propshaft. If the bush is worn, the prop will run out, causing leakage (and bad vibes which will do a lot of damage).
If there is noticeable play, then firstly check the prop is not worn

but normally it is the bush. The replacement bush is about a fiver, but needs to be machined to size after fitting

Ray. MMOC#47368. Forum moderator.
Jan 06: The Minor SII Africa adventure:
http://www.minor-detour.com
Oct 06: back from Dresden with my Trabant 601 Kombi
Jan 07: back from a month thru North Africa (via Timbuktu) in a S3 Landy
June 07 - back from Zwickau Trabi Treffen
Aug 07 & Aug 08 - back from the Lands End to Orkney in 71 pickup
Sept 2010 - finally gave up breaking down in a SII Landy...
where to break down next?
2013... managed to seize my 1275 just by driving it round the block
