That "O-Ring" gasket has a slit in it, so that the thermostat fits into it. I don't mean to insult you, but you did slip the o-ring over the thermostat, correct? (We've all had at least one of those oh-s**t moments
)
9 ft lbs sounds right on the torque. Make sure there are not any lumps or bumps of rubber from the old gasket in the thermostat housing or the block that might be affecting the new o-ring from getting a good fit.
(And this seemed like such a simple job, didn't it?:frown
As to pgilliam1's comment on using rubber gaskets DRY, silicone grease is not a sealant that hardens or sticks to rubber, its just a lubricant. It protects rubber, keeps the rubber soft, and helps it slip into various nooks and crannies, making a better fit. That said, in most applications one needs to make sure it is only a light coating and all excess is removed. You wouldn't want it to get into the oil, for example. But, unless you left large globs of the stuff on the gasket, this is not an issue in the cooling system.