Rubber washer goes on the .EDIT:" INSIDE"...over the male end,,,then "snug" the lock ring in place...
If you tighten it too much it can distort the washer and cause a leak...or you may even "crack" the lock ring, causing it to not "seat" properly...
Best bet would be to take it apart, inspect for cracks, rips or wrinlles and reinstall "snug/firm" but not cranked down tight...
As far as the inner box, run it as high as you can on the inside to minimize the water draining out...(with in the limits of proper opperation)...
As far as "will your sump hold it all..?"....That's pretty much a try it and see type opperation...(keep the towles handy)...you might need a bigger sump...
The "easy" way to do this is...fill the tank as high as the overflow will let it go...then fill your sump as high as you feel safe with (power out) ...and then turn the system on...
Hopefully the "extra" water in the sump is enough to get the siphon going, the tank to proper level and still have enough in the sump to cover your pump...
If you need to add water after you start the unit..."that's" how much will spill out when the power goes out, or that's how much bigger your sump needs to be..