Is this front frontpipe to mid pipe (towards the back) or front pipe to overpipe (towards the front)? The donut gasket is sandwiched between the two pipe at the rear portion, going to the mid pipe. The two pipes bolted together do not 100% close the gap (in my experience anyway). You just put the donut on the front pipe and bolt it together so it is held in place.
Here's a picture of the connection
http://www.ft86club.com/forums/showthread.php?t=93368