Outer Limits 4x4 Board

The the Blue cap on the outer casing(red arrow) turns when the shaft turns and on the shock dosn`t? there is a grub screw thats tight buit I`m sure its not right,These are supposed to be brand new shocks
and also the rubber ring on the shaft is perished and about to crack in half

replace the o-ring ( no big deal) , the blue ring is just a dust cap and is free to rotate, no need to lock it in.